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PRESENTED BY 



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(5 . - r / . - ^ e re/ redo??/ 



FOUNDING 



OF THE 



CINCINNATI 
SOUTHERN RAILWAY 



WITH AN 



AUTOBIOGRAPHICAL SKETCH 




F 



BY 



E. A: FERGUSON 



CINCINNATI: 
THE ROBERT CLARKE CO, 

1905 



Gift 
Author 
(Person) 

9 N'05 



d 









CONTENTS. 



PAGE 
V 

1 

6 

18 



Preface --------- 

I. Autobiographical sketch of E. A. Ferguson, 
II. The Necessity of the Railway, by Dr. J. H. Hollander, 

III. Legislation and Litigation, by Dr. J. H. Hollander, 

IV. Testimony of E. A. Ferguson, before Special Master 

Commissioners, ------- 31 

V. Testimony of E. A. Ferguson, before Investigating Com- 

mission, 61 

VI. Account of the Banquet, March 18, 1880, with Speech 

of E. A. Ferguson, 125 

VII. Municipal Results, by Dr. J. H. Hollander - - 219 



APPENDIX. 

A. Text of Ferguson Act 131 

B. Opinion of Judge Alphonso Taft, and concurring opinions 135 

C. Common Carrier Act 142 

D. Memorandum of Agreement between the Trustees of 

The Cincinnati Southern Railway and The Cincin- 
nati Southern Railway Co. - - - - - 145 

E. Form of Lease prepared by E. A. Ferguson - - - 152 



(iii) 



PREFACE. 



With the exception of the autobiographical sketch this work 
is a compilation from various scattered sources. It is not a his- 
tory of the efforts made before the passage of the Ferguson Act 
to get a railway from Cincinnati to the South Atlantic Seaboard 
or to the south. Incidentally allusions are made to these efforts. 
It begins with the drafting of the Ferguson Bill and ends with 
a short account of the grand banquet given by the citizens of 
Cincinnati on March 18, 1880, upon the opening of the Cincin- 
nati Southern Railway for traffic between its termini, the city of 
Cincinnati, and the city of Chattanooga, Tennessee, a distance 
of 336 miles. 

From the dissertation of Mr. J. H. Hollander, a student at 
the Johns Hopkins University, presented to the Board of Uni- 
versity Studies for the degree of Doctor of Philosophy, I have 
taken and used, with his and the University's consent, the 
chapter on "The Necessity of the Railway" and that on "Legis- 
lation and Litigation." After the degree was conferred on him, 
his dissertation was published in January, 1894, in the Twelfth 
Series of the Johns Hopkins University Studies, with the title, 
"The Cincinnati Southern Railway, a Study in Municipal Activ- 
ity." 

Dr. Hollander spent several months in making a thorough 
investigation of the subject of his essay. In matter, thought and 
style it is believed to be unexcelled by any similar dissertation. 
It is regretable that there are but few copies of it left, and it is 
hoped that if he should prepare a supplement, giving his views 
of the municipal results of the operation of the railway under 
the lease to The Cincinnati, New Orleans & Texas Pacific Railway 

(v) 



vi PREFACE. 

Company, that his original monograph will be reprinted with it. 
Dr. Hollander is now a Professor of Political Economy in the 
Johns Hopkins University. He has made a national reputation 
for himself by his work for the United States Government in 
devising for Porto Rico a system of local taxation to meet the 
expenses of its domestic government which was adopted and went 
into force in July, 1901, and under which, with free trade with 
this country, that island has been greatly benefited. 

For a sketch of the frequent vacillation of public opinion 
and the consequent delay in the completion of the railway, ref- 
erence is made to a pamphlet, entitled "The Beginnings of the 
Cincinnati Southern Railway/' published by Mr. H. P. Boyden, 
November 9, 1901. Mr. Boyden 's experience as a journalist and 
as City Auditor of Cincinnati amply fitted him for his task. It 
will repay perusal. 

For laws relating to the railway, other than the Ohio Acts, 
published in the appendix hereto, reference is made to a com- 
pilation published by the Trustees which contains them and the 
Tennessee and Kentucky acts, authorizing the Trustees to ex- 
ercise the powers in those states conferred on them by the Fer- 
guson Act. As there was but a mile of the original road in Ohio, 
it is evident that without the Tennessee and Kentucky enabling 
acts, the plan would have failed, unless congress had intervened, 
and authorized the construction of the railway by the Trustees 
as a military and post road. 

To the Hon. John G. Carlisle, then Lieutenant Governor of 
Kentucky, credit is principally due for the passage of the Ken- 
tucky acts. 

For the use of the plates of the railway, as finally built, and 
the view of the Grand Banquet, I am indebted to the Lessee 
Company. 

August 28, 1905. 



I. 

Autobiographical Sketch of E. A. Ferguson. 

I was born in the city of New York, November 6, A. D. 
1826. In 1830, my parents moved to the city of Cincinnati, 
bringing with them their two children, my elder brother, Wil- 
liam Gribbon Ferguson, and myself, Edward Alexander Fergu- 
son. I was educated in the public schools of this city, at Tal- 
bot's Academy and Woodward College, from which I was grad- 
uated in the English Department in June, 1843. I had also 
studied Latin and Greek, enough of the former to be useful as a 
student and practitioner of law. When I entered Wood- 
ward College my desk-mate was Charles Nordhoff, who 
became a noted author. Having imbibed a strong desire 
to become a lawyer, I entered my name with Henry Snow, Esq., 
of the Cincinnati Bar, who had been Professor of Languages in 
Woodward College while I was a student. I pursued my studies 
at home, my method being to read not less than thirty pages of 
law each week-day, except Saturday. Saturday morning I re- 
viewed what I had previously read, and on Saturday afternoon 
was examined by Mr. Snow. In this way I acquired, in the 
course of five years, a good knowledge of the principles of law. 
W r hile studying law I read history, political economy, and the 
best of the English Classics. One of the books that had probably 
the most to do in forming my opinions was the Edinburgh Re- 
view, the bound volumes of which I read from its first issue. 

At the May term, 1848, of the old Ohio Supreme Court, on 
the Circuit, I was admitted to the bar; but did not commence 
practice until December of that year, having for the previous 
eighteen months taught in the public schools of Cincinnati. 
On September 17, 1851, I married Miss Agnes Moore, a grand- 
CD 



2 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

daughter of Adam Moore, an early pioneer and a leading mer- 
chant of Cincinnati. 

In April, 1852, in my twenty-sixth year, I was elected by 
the City Council of Cincinnati, City Solicitor. My first duty 
as Solicitor was to go to Columbus, Ohio, where the First Gen- 
eral Assembly under the Constitution of 1851 was in session. 
A general tax law had been passed, a section of which so re- 
stricted, it was thought by the city officers, the levy for city 
purposes, that under it there could not be a sufficient amount 
raised for municipal purposes to carry on the city government. 
There were two bills pending for the organization and govern- 
ment of municipalities, one drawn by William G. Williams, 
the City Clerk, and introduced in the House by Benjamin T. 
Dale; the other drawn by William Y. Gholson, my predecessor 
in office, afterwards a Judge of the Superior Court of Cincin- 
nati and the Supreme Court of Ohio, which was introduced in 
the Senate by Adam N. Riddle, a Senator from Hamilton 
County. Mr. Dale felt aggrieved that Senator Riddle had in- 
troduced the Gholson Bill without first consulting with him, 
as he had first introduced the Williams Bill. Mr. Dale also 
complained that he could not get his colleagues, the Hamilton 
County Delegation, who were mostly young men, to give at- 
tention to this important subject. Upon my suggestion Mr. 
Dale agreed that we should meet at his room in the evening and 
take up both bills. As the Gholson Bill was drawn by a learned 
lawyer, and contained provisions for the organization as well 
as the government of municipalities which the Williams Bill 
did not, we took up the Gholson Bill first, and by twenty-seven 
amendments taken principally from the Williams Bill, that 
evening prepared a new bill which became the Municipal Code 
of May 2, 1852. 

One of the amendments repealed the restricting clause in 
the general tax law; another created the Police Court. This 
was my first experience in legislation. My term as City Solici- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 3 

tor expired in May, 1853, and soon thereafter I was retained by 
the Commissioners of Hamilton County as their legal adviser, 
and was such for about eight years. During this time a new 
court house, jail, lunatic asylum, and other public works were 
constructed, which required the drafting of bills and contracts 
which became the subject of litigation. 

In addition to a general practice I was engaged as one of 
the Counsel in all the important street and steam railway cases. 

In May, 1855, I went abroad on a vacation trip. While in 
London I visited the Courts of Law and Equity then in session 
and had an opportunity of listening to debates in the House of 
Commons. From London I crossed to the continent landing at 
Ostencl and from thence to Brussels and the field of Waterloo, 
then to Cologne and through the Rhine Country into Switzer- 
land. From Switzerland I went through France, stopping two 
weeks at Paris during the Exposition, returning to England 
and going as far north into Scotland as Edinburgh. 

At the October election in 1859, I was elected one of the 
three Senators from Hamilton County to the General Assembly 
of 1860-1861. While in the Senate I drew various bills which 
became laws relating to the City and County government and 
street railways. I also drew the Bribery Act, the Canal Leasing 
Act, and after the outbreak of the Civil War in 1861 with the 
aid of General George B. McClellan, the act under which was 
organized the Ohio Volunteer Force. Among the Senators who 
afterwards became distinguished were James A. Garfield, Jacob 
D. Cox, and Thomas M. Key. In the House was William B. 
Woods, who became distinguished as a soldier, and afterwards 
a Judge of the Supreme Court of the United States. General 
Benjamin R. Cowen was Clerk of the House; two of the re- 
porters were Whitelaw Reid, now of the New York Tribune and 
Ambassador to England, and William Dean Howells, one of the 
editors of Harper's Magazine, and a distinguished author. 

After the expiration of my term as Senator in 1861, upon 



4 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

the election of Charles Fox, Esq., as a Judge of the Superior 
Court of Cincinnati, who had been solicitor of the Cincinnati 
Gas Light and Coke Company, I was retained by that company 
in his place, and continued such for about thirty-three years. 

The foregoing is a partial statement of my experience as 
a lawyer and legislator before drafting, in my forty-second year, 
the Cincinnati Southern Railway Act of May 4, 1869. 

As to the part I took in the execution of the trust after 
my appointment as Trustee, Dr. Hollander in his review of the 
trust has this to say (Essay page 73) : 

"In the objective study of an institution, it is rarely pos- 
sible to recognize personal elements. Yet any survey of the 
influences at work in the history of the Cincinnati Southern 
Railway would be imperfect without a clear recognition of the 
part contributed by a single personality, Mr. Edward A. Fergu- 
son, the author of the original enabling act, and a member of 
the Board of Trustees since its creation. In so far as it is pos- 
sible to speak of any large work as the product of a single agent, 
the Railway is to be associated with his name. The inception 
of the project, every piece of legislation, is traceable to his legal 
ingenuity. He is closely identified with the actual construc- 
tion and ultimate disposition of the Railway, and but few de- 
tails in its history fail to reveal the impress of his activity. 
Material interests, political preferment have been sacrificed, and 
a life of high possibilities devoted with rare unselfishness to this 
one end." 

To this may be added the testimony of Mr. H. P. Boyd en, 
in his pamphlet entitled "The Beginnings of the Cincinnati 
Southern Railway." On page 110 he says: 

"Mr. Hollander says in his intensely interesting sketch, 
'The experiment was unique as it was remarkable.' So it was 
as hazardous as it was unprecedented. It was not in the power 
of the capacity of many men to steer a straight course in the 
nine years from the time the building of the road was decided 
on to the decisive vote of 1878. 

' ' But no one can read the history of those years as meagerly 
set forth in the various extracts that have been given, and call 
back to mind what happened in the years that came after, and 
fail to recognize the dominant, controlling power of one man 
and his consistency of purpose. The man whose ingenuity and 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 5 

knowledge of the law drew the first act ; who as ■ Trustee thought 
out a plan for the construction of the road which was finally 
carried out almost to the letter; whose faith never wavered and 
who cheered in times of despondency ; whose indomitable courage 
withstood attacks from fellow Trustees, from newspapers, from 
the Avealthiest men in the city, whose steadfast conviction as to 
policy sustained him through criticism and objection, whose fer- 
tility of resource, capacity to meet obstacles and overcome them, 
whether interposed by General Assemblies or Chamber of Com- 
merce, never failed him— Mr. Ferguson is the one above all 
others who, from first to last, hewed close to the line. ' ' 



II. 

The Necessity of the Railway. 

(By Dr. J. H. Hollander.) 

During the early decades of the present century, Cincin- 
nati was the most important commercial center of the West. In 
1820, Chicago had not yet come into existence, St. Louis was 
a mere trader's settlement, and Louisville a modest town of 
some four thousand inhabitants. The traffic of the entire 
region drained by the Mississippi river and its tributaries was 
transported by water, and Cincinnati was practically the only 
market in which the surplus products of the South and West 
could be exchanged for eastern and northern manufactures. 
The application of steam to river navigation in the decade be- 
tween 1820 and 1830 greatly strengthened and developed these 
natural advantages. Louisville and St. Louis rose about the 
same time to commercial importance, but their competition only 
served to stimulate the growth of the older city. Population 
increased from 9,642 in 1820 to 161,044 in 1860, and remained 
throughout this entire period the largest of any city west of the 
seaboard. 1 Commercial relations extended from Pittsburgh to 
Fort Benton, Montana, and from St. Paul to New Orleans. 
Particularly with the South, as a result of advantageous location 



1 The population of the four 


cities, as 


shown by the several census 


reports, was 


as 


follows: 
















1820 


1830 


1840 


1850 


1860 


1870 


Cincinnati 




9,642 


24,831 


46,338 


115,435 


161,044 


216,239 


Chicago 







70 


4,470 


29,463 


112,172 


298,977 


St. Louis 







5,862 


16,469 


77,860 


160,773 


310,864 


Louisville 




4,012 


10,341 


21,210 


43,194 


68,033 


100,753 



See Report on Internal Commerce and Navigation of the United 
States, 1880, p. 73. 

(6) 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 7 

and intimate acquaintance with the tastes and habits of southern 
merchants, a large and profitable business was enjoyed. 

Recognizing that the natural empire of trade lay in this 
direction, clear-headed Cincinnati merchants early urged the im- 
provement of existent means of communication. Already in 

1835, five years after the feasibility of steam locomotion had been 
demonstrated, a public meeting was held for the purpose of con- 
sidering the subject of railway transportation between Cincin- 
nati and the cities of the South Atlantic. An active part was 
taken in the agitation which, in the following year, secured the 
charter of the Cincinnati, Louisville and Charleston Railway, 
and a memorable event in early municipal history was a wonder- 
ful illumination of the city, amid falling snow, in February, 

1836, in celebration of the grant of right of way to this road 
by the 'Legislature of Kentucky. Cincinnati sent a strong dele- 
gation to "the great southwestern railroad convention," held in 
furtherance of the project in Knoxville, in the following July, 
at which delegates were present from Indiana, Ohio, Kentucky, 
Virginia, Tennessee, Georgia, Alabama, South Carolina, and 
North Carolina, and over which Governor Hayne of South 
Carolina presided. The proposed road was here endorsed, and 
a route selected from Charleston, South Carolina, along the 
French Broad through Cumberland to Cincinnati. The Ken- 
tucky charter required the construction of branch roads from 
some point in the southern portion of the State to Maysville and 
Louisville. This burdensome condition delayed the commence- 
ment of work until the financial crash of 1837, when, under 
the general industrial and financial depression, the project, with 
all that it promised, was for the time abandoned. Agitation for 
a southern railroad was renewed at intervals in Cincinnati dur- 
ing the next fifteen years. The constitution of Ohio permitted 
special acts of legislation authorizing cities, towns or town- 
ships to become stockholders in private corporations, and in the 
general spirit of the period, encouragement was given to various 



8 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

unsuccessful railroad companies organized for the purpose of 
providing direct access to the South. 

By the year 1850, the reaction against public works in 
Ohio had fairly developed. The State debt at that time 
amounted to over eighteen millions of dollars, and "as busi- 
ness enterprises both the public works and the private concerns 
aided by the State were failures. ' ' 1 The abuses of rash wild-cat 
speculations made in the mad fever for internal improvements 
by cities and counties throughout the State had grown very 
serious. Most of the stock so subscribed had become utterly 
worthless, and the greatest difficulty was experienced in the as- 
sessment and collection of the heavy taxes necessary to meet 
the bonds by which the subscriptions were paid. Legal processes 
had repeatedly to be employed, counties attempted repudiation, 
and the public credit was greatly shaken. 2 The general situation 
was so ominous that the Constitutional Convention which met in 
1850 not only prohibited State aid of any kind to public works, 
but inserted, by a decisive vote of 78 to 16, the following clause 
in the new document : 3 

Art. VIII. Sec. 6. — "The General Assembly shall never 
authorize any county, city or township, by vote of its members 
or otherwise, to become a stockholder in any joint stock company, 
corporation or association whatever, or to raise money for, or 
loan its credit to or in aid of such company, corporation or as- 
sociation. ' ' 

The insertion of this clause definitely removed the possi- 
bility of Cincinnati securing railroad connection by subscription 
to any private enterprise. 

In the meantime, the local necessity for improved means of 
communication with the South had grown in urgency. Com- 

1 Charles N. Morris, Internal Improvements in Ohio; in Papers of 
the American Historical Association, vol. iii., p. 107. 

2 Walker vs. City of Cincinnati, 21 Ohio St., 14. 

3 Poore, Charters and Constitutions, ii., p. 1473. For the long and 
interesting debate which preceded its adoption, see Debates of Con- 
stitutional Convention of Ohio, 1850-51, ii., p. 300 et seq. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 9 

mercial supremacy in the West and Northwest departed from 
Cincinnati with the inauguration of railroad transportation in 
the valley of the Mississippi. The area of trade was greatly 
enlarged, but the number of competing points more than 
proportionately increased. Three distinct lines to the sea-board 
brought in New York, Philadelphia, Baltimore and Boston as 
active competitors for trade north of the Ohio river. The 
Chicago and Rock Island Railroad, with connections completed 
in 1854, gave Chicago access to the northwestern region of 
Dakota, Nebraska Minnesota, and Iowa. St. Louis reached out 
in all directions, increasing connecting mileage in Indiana, 
Illinois, and Missouri from 339 miles in 1850 to 4186 miles in 
1856. 1 Cincinnati responded to this general movement by active 
railroad construction and extension. The mileage of Ohio grew 
from 299 miles in 1850 to 1869 miles in 1856. 2 But the exclusive 
advantages that had existed with respect to water transportation 
no longer prevailed. The closer proximity and momentum of 
growth of the new cities, the ease of railroad construction in the 
West, more than compensated for the advantages of established 
industries and defined lines of trade. 

In the South, Cincinnati retained a dominating position for 
some years longer. Railroads constructed during the early part 
of the decade were largely tributary to river transportation, or 
local lines offering little competition to river traffic. In 1859, 
however, the Louisville and Nashville Railroad was opened for 
through travel, and Louisville, the most active competitor of Cin- 
cinnati for Southern trade, was placed in direct communication 
with Nashville, thence by connecting roads, with Knoxville, 
Chattanooga, Memphis, Augusta, Charleston, and almost every 
important point in the South. The superior rapidity and regular- 
ity of railroad transportation at once asserted itself, and a steady 

1 Internal Commerce of the United States, 1882; Appendix, p. 235. 

2 Report of Secretary of State of Ohio, 1880, p. 625. The greater 
part of this was directly tributary to Cincinnati. 



10 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

deflection of traffic from the river to the railroad, that is, from 
Cincinnati to Louisville, set in. 

The graver aspect of the situation now engaged general 
attention. Efforts were renewed to secure the construction of 
an independent Southern railroad by private enterprise, but 
without success. It was a period of quick active speculation, 
with abundant opportunities for secure investment and imme- 
diate returns. The length of the proposed road, the unusual 
topographical difficulties of the route, the probable cost of 
construction, the slow development of. local traffic, the certainty 
of bitter competition from an intrenched corporation, and the 
necessity for practically completing the line before profitable 
connections could be secured, presented difficulties to outside 
capital which the obvious local desirability of the road could 
not overcome. Various propositions were suggested to evade the 
constitutional prohibition of municipal aid, but these were one 
after another demonstrated impracticable. 

In 1859, an attempt was made to stimulate private enter- 
prise by the offer of a cash bonus to be raised by individual sub- 
scription. After some negotiation, the Cincinnati, Lexington 
and East Tennessee Railroad, in operation from Lexington to 
Nicholasville, Kentucky, proposed to extend its rails to Knox- 
ville, Tennessee, upon the condition that the sum of one million 
dollars should be so provided. The Kentucky Central Railroad 
was already in operation between Cincinnati and Lexington, and 
the proposed extension would practically give Cincinnati an in- 
dependent line into the heart of Southern territory. The offer 
was conditionally accepted, and subscription lists circulated. 
Many persons, whether convinced of the futility of the project, 
or believing that the necessary amount would be raised in- 
dependently, failed to respond as expected, and after a little 
more than half of the entire sum had been secured, no further 
progress was made. Modifications of the original plan were sug- 
gested, but before anything could be accomplished the muttering 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 11 

of the approaching civil storm had diverted public attention in 
other directions, and all agitation was abandoned. 

During the war the absence of a Southern railroad was 
keenly felt. A direct line connecting Cincinnati with some com- 
manding point in the South, appeared so obviously necessary 
to successful military operations that one of the early messages 
of President Lincoln to Congress urged its construction. 1 Sur- 
veys were ordered by General Burnside, and lines run by Mr. 
W. A. Gunn, of Lexington, Kentucky, from Nicholas ville, south 
to the Cumberland river. 2 Somewhat later a draft of negroes 
was actually made for the preparation of grades. No immediate 
action was, however, taken by Congress, and in the excitement of 
immediate developments the enterprise was allowed to drop. 
But for the failure of local representatives to press the Presi- 
dent's recommendations upon Congress, and the abandonment of 
the projected advance against Cumberland Gap, it is probable 
that the construction of a Southern railway would have been 
at least undertaken by the national government. 3 

The commercial interests of Cincinnati suffered much from 
the events of the war. Trade with the Southern States was 
practically cut off, and manufacturing and commercial interests 
were paralyzed. The demand for military supplies later de- 
veloped feverish activity in certain industries, but the stimulus 
was artificial, and its evil effects were felt in the reaction which 
followed the close of the struggle. "When business interests 
returned to normal development with the revival of the pros- 
trate industrial life of the South, it appeared that the four 
years of strife had firmly established the deflecting tendencies of 
the preceding period. Just as the rich stream of immigration 

1 Congressional Globe, Dec. 3, 1861; Appendix, p. 1. 

2 Mr. Gunn was subsequently appointed Chief Engineer of the 
Cincinnati Southern Railway and directed the preliminary surveys 
made for this purpose. The line, as finally located, included a portion 
of the earlier military survey. 

* Cf. Nicolay and Hay, Abraham Lincoln, v., pp. 66-67. 



12 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

had been diverted from the valley of the Ohio to the fertile 
region of the Northwest, so the new channels of trade, which the 
dawning revolution in means of transportation had indicated, 
were now permanent and predominant. By 1868, the general 
traffic of the North and West had passed from Cincinnati to the 
new cities of the Mississipppi and the Lakes, — St. Louis, Chicago, 
Cleveland, Toledo, and Indianapolis. 

A no less critical situation was developing in the South. 
Years before a Southern railway had been urged as an ad- 
vantageous outlet from the Ohio river to the southeastern sea- 
board. Such was the plan of the Cincinnati, Louisville and 
Charleston Railway, and the significance of the agitation of 
1835-6. But now the situation had changed. Cincinnati 
reached the seaboard through New York, Philadelphia, and 
Baltimore, and sought southern territory for its own sake. 
Moreover, throughout the South, the river had definitely yielded 
to the railroad. Two large systems of railroads, embracing 
some 4,000 miles, had grown up, — the one extending from the 
southeastern seaboard in a northwesterly direction, the other 
bearing from the southwestern Gulf cities toward the northeast, 
and converging with the former in eastern Tennessee. Louis- 
ville tapped this network by means of the Louisville and Nash- 
ville, and the Nashville and Chattanooga railroads at the precise 
juncture of the two branches, Chattanooga, Tennessee. 

The only connection of Cincinnati with the South, aside 
from the all-water route, was by river to Louisville, thence via 
Nashville and Chattanooga by the Louisville and Nashville 
Railroad. As a means of transportation in competitive trade, 
it was both indirect and inadequate. Shipments to a dis- 
tributing point due south from Cincinnati, as Chattanooga, de- 
scribed a wide circuit, going successively west, south, east, and 
north. The legitimate difference in freight charges, other things 
being equal, tended to swell the stream of Louisville trade at the 
expense of that ' of Cincinnati. The Louisville and Nashville 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 13 

Railroad was moreover, at that time, "a Louisville road," con- 
trolled by, and operated in the interests of Louisville merchants. 
Rail rates between Cincinnati and local points were made by 
adding the rate between Cincinnati and Louisville to the rate 
between Louisville and those points. Between Cincinnati and 
competitive points, the rates were formed by adding an arbitrary 
charge between Cincinnati and Louisville to the rate from Louis- 
ville to such points. 1 The facilities of the road for shipments 
from Cincinnati to Southern points were entirely inadequate. 
Through freight was delayed in Louisville, and merchants still 
tell of pork destined for this section, unladen at Louisville and 
piled up for days outside of the city. For several years the 
Board of Trade of Cincinnati maintained a special agent at 
Louisville to trace out and hurry through Southern consign- 
ments. 

The disadvantages thus indicated were emphasized by the 
radical changes in business methods which the economic revolu- 
tion in the South had effected. Formerly the needs of a large 
portion of the population had been uniform and supplied by 
the planter, who purchased his stores in the larger Southern 
cities and retailed them to his body of dependents. Now, how- 
ever, the negro bought for himself where and what he wished. 
General merchandise stores sprang up at every cross-road, and 
Southern merchants poured into Northern centers ready to buy 
for cash or on short time larger and more varied supplies. 2 The 
natural tendency was for these buyers to stop off at Louisville, 
rather than continue for 150 miles to Cincinnati, where any ad- 
vantage gained in purchase would be lost in additional freight 
charge and delay in transmission. 

By the spring of 1868, the construction of an independent 
Southern railroad had passed from a matter of general ex- 



1 Internal Commerce of United States, 1880, p. 90. 

2 See Merchant's Magazine, vol. lvi., 1869, p. 363. 



U, FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

pediency to one of commercial necessity. The subject was under 
constant discussion in Cincinnati, and various projects of more 
or less impracticability were proposed. The bonus plan was 
revived by a proposition from the Atlantic and Great "Western 
Railroad to acquire the Lexington and Danville Railroad and 
extend it in connection with the Kentucky Central to a Southern 
center, provided that a partial guarantee fund would be sub- 
scribed. Like the earlier attempt, this proved unsuccessful. 
Attention was also given to ' ' the Dickson plan, ' ' based upon the 
claim that, while the State constitution forbade a municipal gift 
or loan to "any stock company, corporation or association," 
there was nothing in it to prevent such action with respect to an 
individual who should engage to build the road. The doubtful 
validity of the interpretation, and at any rate the impossibility 
of securing such an "individual," were soon pointed out. 

The situation, to summarize, was this: Cincinnati and 
Louisville were active competitors for Southern trade. This 
trade was definitely established upon the basis of railroad 
transportation. Cincinnati possessed no direct railroad to the 
South; Louisville did. The advantages enjoyed by the former 
city in the era of water transportation were now held by the 
latter. Southern merchants dealing directly with the North 
were diverted from Cincinnati by the closer proximity of 
Louisville. The advantages of commercial traveling were min- 
imized by inadequate transportation facilities, unreasonable de- 
lays, and arbitrary freight charges upon Southern consignments 
shipped via Louisville. Louisville, in a word, threatened to dis- 
place Cincinnati as the chief distributing point of Northern 
manufactures to Southern consumers. Various unsuccessful 
attempts had been made to secure the construction of an inde- 
pendent Southern road. Serious obstacles stood in the way of 
unaided construction by private capital; on the other hand, a 
specific clause of the Ohio Constitution prevented municipal 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 15 

aid to private enterprises, the most feasible method of securing 
at least its projection. • 

In the winter of 1868, the remarkable proposition was first 
broached by Mr. Edward A. Ferguson, a skilled constitutional 
lawyer of Cincinnati, that, failing all other means, the city 
should itself construct the road. Mr. Ferguson had long felt 
the necessity of direct communication with the South and the 
improbability of private enterprise establishing it. Careful 
study of the constitutional limitation and related judicial deci- 
sions led him to believe that, while Cincinnati was disqualified 
from lending aid to private enterprise, the city was not forbid- 
den the exercise of independent activity. The circumstances 
of the inception of the idea, as told by Mr. Ferguson himself, are 
interesting : * 

"In July, 1868, I had been preparing a brief for an argu- 
ment in the Supreme Court, in the case of Hatch vs. The Cin- 
cinnati and Indiana Railroad Company, involving the title of 
the company to the canal-bed, which had been appropriated for 
railway purposes. After the preparation of that brief I took 
a short vacation and went to New York City. One Sunday 
evening, while there, a freight agent of one of the railroads came 
up to certain Cincinnati merchants to give them a hint that there 
was to be a change of rates and that they had better hurry their 
shipments. This led to a talk about railway facilities at Cincinnati 
and about the fact that Cincinnati was losing her business ; that 
she was being cut off from the entire trade of the Northwest; 
that she formerly had a large trade in Iowa,' but that was 
leaving, or had about left her; that the great want of the city 
was a railroad to establish an empire of trade, and that empire of 
trade was the South ; that was the only place for Cincinnati trade. 
It was lamented that, under the constitution, the city, without 
co-operative capacity, could do nothing toward building the road. 
The brief of which I have spoken had led me to consider the legal 
and constitutional questions which were involved in this sub- 
ject of the city's building the road, — not the question so much 
as the case bearing upon it. I said to the gentlemen: 'You are 

1 Report of the Commission on the Affairs of the Trustees of the 
Cincinnati Southern Railway, the Management of their Trust and 
the Disbursement of Moneys entrusted to their Care. Cincinnati, 
1879. Testimony of Mr. B. A. Ferguson, pp. 99-100. Henceforth this 
report will be referred to simply as, Report of Investigating Commis- 
sion. 



16 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

mistaken about the constitution of Ohio ; it is not as you sup- 
pose. Under the present constitution Cincinnati can do what 
she could have done under the former constitution. ' I instanced 
to them the fact that while the city of Cincinnati could not own 
a share in the gas company, and it was not essential to her in- 
terest that she should, as she had a contract with the present gas 
company, who were able to furnish gas cheaper, probably, than 
she could make it herself, that the city could buy the gas works 
and become a gas manufacturer, and supply private consumers, 
and that the people had voted three millions of dollars for that 
purpose. In other words, the prohibition was against the city 
being a stockholder and not against accomplishing a public 
object out of her own means. I wound up by saying: 'I be- 
lieve, when I get home, I will draw a little bill to see what can 
be done under the Democratic constitution.' The constitution 
had been spoken of as a Democratic constitution, and all the 
gentlemen present, I believe, were Republicans but myself. 
After I returned home in the fall of that year I was taken sick, 
and having leisure, I thought of this project, and sat down one 
day to see how I could draft a bill to meet the case. I roughly 
sketched the first section ; when I had done that, I became satisfied 
that it could be done." 

Some weeks elapsed before Mr. Ferguson prepared a satis- 
factory revision of the first draft of the bill. It was finally 
completed and given to the press on November 25, 1868. The 
measure was drawn in general terms, according to constitutional 
requirement, and entitled "An act relating to cities of the first 
class having a population exceeding one hundred and fifty 
thousand inhabitants." Cincinnati was, of course, the only 
city in the State whose population reached that number. 

The measure provided that, whenever the City Council of 
Cincinnati should pass a resolution declaring it essential to the 
interests of the city that a railway be provided between two 
designated termini, one of which should be Cincinnati, and a ma- 
jority of qualified electors should have decided at a special elec- 
tion in favor of the construction of the railway, then the 
Superior Court of the city should appoint a board of five trustees, 
holding office during good behavior, to carry out the object of the 
resolution. The board of trustees so appointed were authorized 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 17 

to issue bonds of such an amount and kind as might be de- 
termined, to be secured by a mortgage on the line of railway and 
its net income, by the faith of the city and by a tax levied an- 
nually sufficient to pay the interest and provide a sinking fund 
for the final redemption of the bonds. This fund should be 
expended in the construction of a railway with all the usual 
appendages, between the specified termini. For this purpose 
the trustees should have power to make contracts, to employ 
officers and agents, to acquire necessary real and personal prop- 
erty and franchises, to receive donations of land, money or bonds, 
and to dispose of the same in aid of the fund. They should 
keep a record of their proceedings and a full and accurate ac- 
count of their receipts and disbursements, and make an annual 
report of the same to the City Council and whenever requested by 
a resolution of the same body. Compensation should be pro- 
portioned to respective services and determined by the ap- 
pointing court. The trustees should not be interested either 
directly or indirectly in any contract relating to the railway. 
Whenever the city solicitor or any bondholder should have 
reason to believe that a trustee had failed in the faithful per- 
formance of his duty, he should apply to the appointing court 
for the removal of the delinquent and the appointment of a suc- 
cessor. A vacancy occurring in the board from any other cause 
should be filled in like manner. The trustees were finally em- 
powered to rent or lease portions of the line as soon as completed, 
such rights to terminate on the final completion of the railway, 
when it should be leased on terms and conditions to be de- 
termined by the City Council of Cincinnati. 1 

1 For the full text of the measure in the form in which it subse- 
quently became a law, see Appendix, A. 



111. 

Legislation and Litigation. 

(By Dr. J. H. Hollander.) 

The Ferguson Bill was widely circulated and generally dis- 
cussed. It was favored by the commercial bodies of the city and 
heartily commended by the local press. Intelligent sentiment 
recognized the very unusual character of the plan, but urged it 
as an heroic measure. A more conservative element, to whom 
the proposition appeared a hazardous dernier ressort, presented 
an untried alternative plan, — an amendment to the ninth article 
of the constitution of Ohio, so as to enable Cincinnati to lend 
credit to private enterprise. The Knoxville Southern Railroad 
was at that time contemplating a northern extension, and a 
liberal municipal subscription would, it was thought, secure for 
Cincinnati this outlet. A carefully prepared amendment was 
presented to the Ohio legislature immediately after that body 
convened in 1869, but failed of passage. 

The failure of this final substitute strengthened sentiment 
in favor of the Ferguson plan. Formal resolutions of endorse- 
ment were adopted by the City Council, the Board of Trade, and 
the Chamber of Commerce. Doubt raised as to the constitution- 
ality of the measure was allayed by eminent legal opinion. Hon. 
Thomas M. Cooley, the distinguished jurist and legal authority, 
wrote that while the constitution of Ohio forbade cities giving 
aid to works of public improvement, there was nothing in it to 
prevent local authorities from levying taxes for the construction 
of a railroad, when their own agencies were employed for the 
purpose. Such action would be in entire harmony with the 

(13) 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 19 

established principle and usages of local self-government. Nor 
did the fact that this particular railroad extended beyond Ohio 
vitiate the rule. The local importance of a road depends upon 
the local facilities it affords to travel and commerce, and not 
upon the question whether it is entirely within the State or not. 

In April, 1869, the Ferguson Bill, with a memorial urging 
its passage, was presented to the General Assembly of Ohio by a 
joint committee of the City Council, the Board of Trade, and the 
Chamber of Commerce. It was introduced in the Senate and re- 
ferred to the Committee on Judiciary. Conferences with 
friends of the measure led to the insertion of ten million dollars 
as the amount of the loan and seven and three-tenths per cent. 
as the maximum rate of interest. A clause was added, significant 
in the later history of the railway, prohibiting the sale of bonds 
at less than par. The trustees were required to enter into bond 
in such sum as the appointing court might direct, and a taxpayer 
was given co-ordinate right with a bondholder of applying for 
the removal of an inefficient trustee. On April 28th the bill, as 
thus amended, was adopted in the Senate by a vote of twenty- 
three yeas to seven nays. It encountered no difficulty in the 
House, passing by a vote of seventy- three to twenty-one, and on 
May 4th, the measure became a law. 

The Ferguson Bill was merely an enabling act, operative 
upon, first, the passage by the City Council of a formal resolu- 
tion, declaring the construction of the railway necessary, and 
designating the terminal points; secondly, upon the subsequent 
ratification of this resolution by popular vote. A special com- 
mittee of the City Council was immediately appointed to select 
a southern terminus. The respective advantages of Atlanta, 
Georgia, and Knoxville and Chattanooga, Tennessee, were dis- 
cussed, the last-named city being, after mature deliberation, 
selected. On June 4th a resolution was passed, reciting the 
powers conferred by the Ferguson Act, and declaring it "essen- 
tial to the interests of the said city of Cincinnati that a line of 



20 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

railway, to be named the Cincinnati Southern Railway, should 
be provided between the said city of Cincinnati and the city of 
Chattanooga." A special election was held on June 26, 1869, 
at which 15,435 votes were cast "for providing said line of rail- 
way," and but 1,500 "against." This unanimity of sentiment 
stimulated subsequent proceedings. Four days later, the 
Superior Court of Cincinnati, upon petition of the City Solicitor, 
appointed a Board of Trustees, consisting of Edward A. Fergu- 
son, the author of the act, Richard M. Bishop, ex-mayor of Cin- 
cinnati and later governor of Ohio, Miles Greenwood, William 
Hooper, and Philip Heidelbach, — the last three public-spirited 
citizens of means and influence, representing in a general way, 
the manufacturing, commercial and financial interests of the city. 
The Board was in no sense a technical body; indeed, no one of 
its members had, prior to his appointment, any practical ex- 
perience in railroad construction. The theory of selection, in so 
far as theory operated, was that the variety of duties devolving 
upon the trust, — including the passage of complex legislation 
and the negotiation of large bond issues, — made it impossible 
to appoint a body composed exclusively of skilled engineers; 
that, on the other hand, the influence of but a single person of 
this kind upon unskilled associates would be predominant and 
ultimate to an undesirable degree. Accordingly, men of sterling 
integrity and large public spirit, enjoying unlimited public con- 
fidence, rather than experts in railroad construction, were 
selected for the execution of the work. The correctness or error 
of this policy will be discussed in another place. It is here suffi- 
cient to repeat that the composition of the Board of Trustees 
was, in so far, conscious and deliberate. 

Before attempting the negotiation of the loan and the 
inauguration of actual construction, the Trustees prepared to 
secure enabling acts in Kentucky and Tennessee. To hasten 
work thereafter, an engineering department was organized, and 
in August, 1869, two surveying parties were placed in the field 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 21 

for the purpose of conducting preliminary surveys. The 
problem of location was unusual in the wide latitude allowed 
by the absence of intermediate points, — the termini Cincinnati 
and Chattanooga being alone fixed, — and in the willingness of 
the Trustees to expend any reasonable amount of time and money 
to secure absolutely the best route. Directness of line was the 
prime consideration, subject, however, to such modifications as; 
the topography of the country and the inducements offered by 
counties and landowners along the route might render desirable. 
Funds sufficient to meet current expenses were secured by 
temporary loans made with the consent of the City Council from 
the city treasury. The validity of this practice was affirmed in 
March, 1870, by a supplementary act of the General Assembly of 
Ohio, authorizing the City Council to advance a sum not exceed- 
ing $50,000 to the Trustees, to be repaid upon the negotiation of 
the construction loan. 1 

Little opposition was anticipated to the grant of right of 
way in Kentucky and Tennessee. Whatever rivalry or unfriend- 
liness might exist in Kentucky was hardly expected to develop 
in the mere legislative franchise. Tennessee was known to be 
strongly in favor of the road. The importance of a northern 
outlet for the eastern section of the State, had long been 
recognized, and in 1866 an attempt had been made to secure a 
northern connection by the incorporation in Chattanooga of the 
Cincinnati and Chattanooga Railway. After a preliminary sur- 
vey to Emory Gap, the construction of the Cincinnati Southern 
was broached, and this project was abandoned. 

The General Assembly of Tennessee convened in the 
autumn of 1869, and a bill granting right of way to the Cincin- 
nati Southern Railway was at once introduced. It authorized 
the Board of Trustees to enter, survey, and acquire by gift, pur- 
chase or condemnation, land or portions of constructed railways, 

1 67 Ohio Laws, p. 28. 



22 FOUXDIXG OF CIXCIXXATI SOUTHERX RAILWAY 

in such amount as might be necessary for the construction and 
maintenance of the Railway. Counties and towns along the 
route were empowered, upon a majority vote of the qualified 
electors, to donate lands or moneys in aid of the construction of 
the road, to an amount not exceeding five per cent, of the taxable 
property. The trustees of the road were required to locate it 
within two years after the passage of the act and to- complete 
it within five. The governor of the State might extend this lat- 
ter period to ten years. The maximum transportation charges 
were fixed at thirty-five cents per 100 pounds and ten cents 
per cubic foot for freight, and five cents per mile for passengers. 
No discrimination should be made against the citizens of Ten- 
nessee, and the legislature reserved the right to enforce these 
provisions by all necessary legislation. Bondholders were 
secured by a statutory mortgage on the road and its net income, 
and failure to comply with any terms of the grant involved its 
forfeiture. A committee of Trustees remained in Nashville 
while the bill was under consideration, explaining its provisions 
and pointing out the local advantages to be derived from the 
road. The measure was strongly supported by popular renti- 
nient. and with some slight additions became a law on January 
20, 1870. 

On January 7, 1870, a similar bill and memorial had been 
introduced into the General Assembly of Kentucky and referred 
to the committee on railroads in Senate and House. It im- 
mediately encountered strong opposition. Xot only were 
sectional jealousy and local pride reluctant to grant so unusual 
a privilege to a city of another State, but rival interests, 
corporate and municipal, brought powerful influences to bear in 
opposition. 1 Various modifications failed to weaken hostility, 
and on March 1, 1870, the measure was defeated in the Senate, 
and four days later in the House. The influences that had 

1 Report of Investigating Commission, pp. 193-194. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 23 

operated were so apparent that the Board of Trustees at once 
prepared to renew the struggle by carrying the measure before 
the people of Kentucky, and making the grant of right of way a 
formal issue in the next legislative election. Agents were ap- 
pointed in different sections of the State, and a general conven- 
tion was held in the interests of the Railway at Lexington in 
October, 1870. Delegates were here present from many of the 
counties of Kentucky, as well as from Tennessee, Alabama, and 
Georgia. The immediate and indirect influences of the Rail- 
way were discussed in detail, and a committee appointed to 
arrange for public meetings throughout the State in behalf of 
the proposed grant. The work of agitation was actively carried 
on during the entire winter. 

The defeat of the Kentucky bill exerted its most important 
influence in Cincinnati. It was the first repulse the project had 
thus far received, and awoke conservative taxpayers to an 
alarmed consciousness of the magnitude of the undertaking and 
the serious difficulties involved. In April, 1870, an injunction 
was taken out by the City Solicitor of Cincinnati, restraining the 
City Auditor from paying over unpaid portions of the loan of 
$50,000 advanced by the City Council for the immediate use of 
the Trustees. The petition averred that both the original and 
supplementary statutes were unconstitutional, and that the 
advance of money was a misapplication of corporate funds and in 
contravention of the laws governing the same. A demurrer to 
the petition was filed by the Mayor and City Auditor and the 
Board of Trustees jointly. The questions thus arising were re- 
served by the Superior Court of Cincinnati, and adjourned for 
adjudication in general term. 

On January 4, 1871, the Superior Court, having had the case 
nnder advisement for several months, pronounced the Ferguson 
act and the supplementary measure of March, 1870, constitu- 
tional and valid, and dismissed the injunction proceedings. The 



2/+ FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

opinion, 1 rendered by Judge Alphonso Taft, with the concur- 
rence of other members of the court, after reviewing 1 the history 
of the case, declared that, independent of constitutional limita- 
tions, the construction of a railroad serving public interests is a 
proper purpose of municipal taxation. This had been re- 
peatedly affirmed and enjoined by the courts of Ohio before 1851. 
If it were not so, the restricting clause of the State constitution 
adopted in that year would have been unnecessary. Not only 
could the General Assembly up to that time authorize a city to 
lend money or credit to. a private corporation in order that it 
might build a needed railway, but it might empower the city to 
build the road directly, in which case the application of the 
public fund was not left dependent upon the good faith and dis- 
cretion of a private corporation. The restricting clause of the 
new constitution plainly cut off the power of the legislature to 
authorize a city to do the first of these things. It did not, how- 
ever, prevent a city, when empowered, from engaging in such 
work directly. A similar limitation had been placed by an 
earlier article of the same section upon the activity of the State ; 
but the bare restriction against loaning money or credit to pri- 
vate companies had not prevented the State from accomplishing 
directly "any purpose whatever." Its power in this direction, 
that is, of making public improvements without the agency of 
a corporation, continued exactly as it had been before 1851. 
"We feel bound," the opinion continues, "to give a like con- 
struction to the sixth section (Article VIII.), which applies to 
cities. They cannot be authorized now, as formerly, to lend their 
funds or their credit to, or become members of, trading corpora- 
tions, for any purpose whatever. But they can be authorized 
to expend their own funds in making necessary public improve- 
ments in the same manner and to the same extent as before 

1 Walker vs. City of Cincinnati, 1 Cin. Sup. Ct. Rep.. 121. (For 
the full text of the opinion of Judge A. Taft and the concurring opin- 
ion, see Appendix "B" p. 135.) 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 25 

the adoption of our present constitution." The fact that the 
proposed road was to extend beyond the city did not vitiate its 
character as a municipal work. In subscribing* to the stock of 
railroads reaching into other States, and in erecting public works, 
such as an infirmary and workhouse in Hamilton county, Cin- 
cinnati had repeatedly exercised authority beyond corporate 
limits. Public expediency, and not municipal confines, must 
determine whether a particular function is within the scope of 
municipal taxation. Finally, while the constitutionality of the 
acts appeared clear of doubt, even were it otherwise, the pre- 
sumption must always be in favor of the validity of the laws 
enacted by the State legislature, if the contrary is not demon- 
strated. 

Fortified by this judicial victory, the Board of Trustees 
proceeded to renew the struggle for necessary legislation in 
Kentucky. During the winter months of 1870, the State had 
been canvassed from end to end in the interest of the project. 
Public meetings had been held in many of the counties, and the 
favorable influence of the Railway upon the development of the 
resources of the State emphasized. It had been shown that all 
the coal used in central Kentucky was floated down the Ohio 
river from Pennsylvania and Ohio to Covington, and then sent by 
rail throughout the State, and that citizens of eastern counties 
were thus obliged to pay from thirty to fifty cents per bushel for 
fuel, while great fields lay untouched within a few hours' ride. 
Similarly the stock-raisers of Kentucky could only reach the 
South indirectly via Nashville, and suffered heavy loss from the 
longer confinement of cattle which this made necessary. Most 
of the meetings so held terminated in the passage of resolutions 
instructing local representatives in the legislative bodies at 
Frankfort to vote in favor of the grant of right of way. 

Immediately after the Kentucky legislature assembled in 
1871, a second measure, known as "the McKee Bill," embody- 
ing the provisions of the previous grant, with certain minor 



26 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

modifications, was introduced. The measure at once became 
an object of contest, and the scenes of the previous year were re- 
enacted. Representatives from Louisville and adjacent 
counties, and a well-equipped lobby, bitterly opposed the bill, 
while representatives of the Board of Trustees and influential 
citizens of Cincinnati busied themselves in its behalf. 1 After a 
legislative battle of two weeks, the bill was narrowly lost in the 
House by a vote of forty-four to forty-three, and some time 
later in the Senate. 

Local interests and sectional jealousy had now twice de- 
feated a grant of right of way through Kentucky. Sentiment 
rapidly developed in favor of seeking relief by federal legisla- 
tion. In anticipation of a general law regulating the construc- 
tion and dimensions of bridges across the Ohio river, a special 
bill had already been introduced in both bodies of Congress, 
authorizing the construction of a bridge according to the special 
plans of the Trustees. A more comprehensive measure, provid- 
ing for right of way through Kentucky and Tennessee, as well 
as the construction of the Ohio bridge, was prepared by Mr. 
Ferguson, and introduced in the United States Senate and House 
of Representatives in February, 1871, the last month of the con- 
gressional session. A delegation of the Trustees proceeded to 
Washington and testified in its behalf before the committees of 
both bodies. The measure was reported favorably in the House 
and passed by a two-thirds vote. In the Senate it failed for 
want of time. 

The outlook was now eminently discouraging. Every alter- 
nate means had been unsuccessfully tried, and nothing remained 
but to persist in the original endeavor. The funds in possession 
of the Trustees were about exhausted. An appeal in error had 
been taken from the decision of Judge Taft, and was then pend- 
ing in the Supreme Court of Ohio. To attempt to negotiate the 

1 Report of Investigating Commission, p. 64. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 21 

bonds when their validity was gravely questioned was impossible. 
The surveying parties that had left Cincinnati in the fall of 
1869 reached Chattanooga in March, 1871, after eighteen 
months of continuous field service, and were ordered to sell the 
field equipment and disband, only a -small force being re- 
tained to work up the surveys. A large number of lines had 
been run and a thorough exploration made of a region widening 
out from Cincinnati to a distance of 70 miles at the Kentucky- 
Tennessee State line, thence converging gradually to Chatta- 
nooga. The belt of country thus enclosed formed an area 
equivalent to about one-third of the State of Kentucky. No 
route had now been considered outside this limit, as involving 
by excessive divergence from an air-line too great a sacrifice of 
directness. 

In December, 1871, Chief Justice Scott, of the Supreme 
Court of Ohio, with the concurrence of his associates, sustained 
the judgment of the lower court upon the validity of the Fer- 
guson and supplementary acts. 1 The general principles of the 
former decision were reaffirmed, with renewed emphasis upon 
the entire competence of the Legislature to authorize under the 
present constitution the municipal construction of public works. 
"The restricting clause of the constitution interdicts a business 
partnership between a municipality or a subdivision of the State 
and an individual or private corporation. It forbids the union 
of public and private capital or credit in any enterprise what- 
soever. If it meant more than this, it would follow that munici- 
pal bodies are powerless to make any improvement, however 
necessary, with their own means and on their own sole account." 
It is the corporate interest of the municipality and not the 
location of the road which determines the right of taxation. 
Finally, the authority and duty to prevent an abuse of powers 
of taxation and assessment by municipal corporations is en- 

x Walker vs. City of Cincinnati. 21 Ohio St., 14. 



28 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

trusted by the constitution to the General Assembly and not to 
the courts of the State. The power of the legislature to author- 
ize local taxation cannot be judicially denied, unless on the 
ground that the purpose for which it is exercised is not local, 
and the absence of all special local interest is clearly apparent. 

This opinion definitely established the constitutionality of 
the Ferguson act and the validity of the bonds therein author- 
ized. It removed the most reasonable ground of opposition to 
the measure, its alleged unconstitutionality. 

During the summer and autumn of 1871, the Kentucky 
representatives of the Trustees maintained an active canvass 
in the interest of the road in sections where hostility was most 
pronounced. The Kentucky legislature reconvened in Decem- 
ber, 1872, and the enabling measure was again introduced. 
Upon the advice of Kentucky friends of the Railway, the 
passage of the bill was left ostensibly to their care, the Trustees 
keeping advised by telegraph and correspondence of the exact 
situation. For several weeks the issue hung in doubt. Finally, 
on February 13, 1872, after "the most determined and positive 
opposition that was ever inaugurated against any bill before any 
legislature," a partial compromise was effected, various preju- 
dicial amendments were inserted, and the bill passed. The 
general tone of the measure, in the form in which it became a 
law, was scant and grudging. Right of way was given, but 
laden with burdensome conditions. The Trustees were required 
to survey a specified route via Nicholasville and Danville, thence 
through Sparta, Tenn., to Chattanooga, and to submit it with 
other lines surveyed to popular selection in Cincinnati, — the 
road being located as thus determined. They were further 
obliged to pay into the State treasury of Kentucky, in addition 
to ordinary taxation, the sum of fifty cents for every passenger 
crossing the State and twenty-five cents for every person travel- 
ing a hundred miles within it; also one cent on every hundred 
pounds of through, freight. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY W 

The construction of the Railway under such conditions 
seemed impossible. In Cincinnati, the amendment or repeal of 
the Ferguson act was accordingly urged, in connection with a 
substitute plan of purchasing the Kentucky Central Railroad 
for three million dollars and transferring it as a quasi-boims to 
a syndicate of railroad capitalists, who should in return extend 
the line to some Southern center. A bill to this effect was act- 
ually introduced in the Ohio legislature, but through the vigor- 
ous opposition of the commercial bodies of Cincinnati and the 
likelihood of the repeal of the odious provisions of the Kentucky 
grant, it failed of passage. The first two of the prohibitive 
clauses were repealed by a supplementary act in the following 
session of the Kentucky legislature ; the third not until February 
4, 1873. The measure was then accepted by the Trustees, and 
the "Ohio River Bridge Act" having already become a law, all 
necessary enabling legislation had now been secured. 

The results obtained by the surveying parties in 1869 and 
1870 were worked up during the following winter and submitted 
to the Trustees in an exhaustive report in March, 1873. The gen- 
eral character of the region to be penetrated has already been re- 
ferred to as one of the chief causes of the failure of private 
enterprise to construct the road. It was highly unfavorable to 
railroad construction, — wild, unsettled, difficult of access, of ex- 
tremely irregular geological formation, intersected by a wide 
mountainous region, and cut by three great rivers and numerous 
smaller streams. The absence of intermediate points, and the 
liberal attitude of the Trustees, led the surveying parties to 
examine a much larger extent of territory than is usual in rail- 
road construction. 1 Three main routes, with some twenty-six 
variations, were presented. The stem lines were the ' ' Eastern, ' ' 
the "Central" or "Military," and the "Sparta" or "Western." 

1 It has been said that the location of no other railway in the 
country has been preceded by such elaborate and varied preliminary 
surveys. The work consumed more than two years of time, and cost 
$183,969.86. See Report of Investigating Commission, p. 8. 



30 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

The "Sparta" route had only been surveyed because of the 
proviso in the Kentucky act. It was never seriously contem- 
plated. The "Eastern" route, through Richmond, London, 
Williamsburg, and Emory Junction, penetrated a smoother 
country and involved easier grades and less tunneling. It had 
the disadvantage of greater length, and was ultimately aban- 
doned for the "Military" route via Nicholasville, Somerset, 
Point Burnside, and Emory Junction. The three lines con- 
verged in the neighborhood of Lexington, where a choice was 
presented between the purchase of the Kentucky Central Rail- 
road and the acquisition of an easement over the Newport Bridge 
across the Ohio river, or of the construction of a direct line and 
an independent bridge. 



IV. 
Testimony of E. A. Ferguson. 

Before the Special Master Commissioners.) 

The Superior Court of Cincinnati appointed Edward D. 
Mansfield, Richard H. Stone and James Pullen to take testimony 
in writing and report the same to the Court. The report was 
made February 3, 1876. Testimony of Mr. Ferguson was taken 
between November 9 and December 29, 1875. 

Question: Please state your name, age, business and place 
of residence. 

Answer. My name is Edward Alexander Ferguson; I am 
forty-nine years of age, am a lawyer by profession and practice, 
and I reside in the City of Cincinnati, Hamilton County, State 
of Ohio. 

Q. State how long you have resided in this city? 

A. I have resided in this city since the 4th day of Novem- 
ber, 1830, and I have been actively engaged in the practice of 
law in this city since the 22nd day of December, 1848, now nearly 
twenty-seven years. 

Q. State whether you are a Trustee of the Cincinnati 
Southern Railway; state when you were appointed, and when 
you entered actively upon the duties of your office; state the 
nature and character of your duties as such Trustee, what por- 
tion of your time have you devoted to the management of said 
road ; state all you can about it ? 

A. I am one of the Trustees of the Cincinnati Southern 
Railway; I was appointed by the Superior Court of Cincinnati, 
on the 30th day of June, 1869, in connection with Richard M. 

(31) 



32 FOUXDIXG OF CINCINNATI SOUTHERN RAILWAY 

Bishop, Miles Greenwood, Philip Heidelbach and William 
Hooper, and qualified by giving bond in the sum of $100,000, on 
the 3d day of July. 1869. On the 6th day of July, 1869, the 
Trustees met and organized by choosing Miles Greenwood, Pres- 
ident of the Board, and appointing H. H. Tatem, Secretary, and 
from that time forth to the resignation of Mr. Hooper on the 
26th day of January, 1875, and the qualification of his suc- 
cessor, W. W. Scarborough, Esq., on the 19th of February, 1875, 
the Board of Trustees continued actively in the discharge of 
their duties as Trustees of said road. 

As the Trustees had no funds, and did not deem it advisable 
to issue bonds before the necessary legislation could be obtained 
in Kentucky and Tennessee, they determined to apply to the 
City Council of Cincinnati for an advance of ten thousand dol- 
lars ($10,000) to be repaid out of the first money realized from 
the sale of bonds. The advance was made; the object in addi- 
tion to paying the ordinary office expenses, was to put into the 
field surveying corps to make the preliminary surveys for the 
route for the line of railroad. 

At a meeting on the 3d day of August, 1869, a communica- 
tion was presented by W. A. Gunn, suggesting the examination 
of five different routes in Kentucky and of the country in Ten- 
nessee, north of Chattanooga, for the purpose of determining 
the propriety of actual surveys southwest of Danville, in Ken- 
tucky; he also submitted a recommendation for the organization 
of parties to make the preliminary surveys. Upon my motion, 
Mr. Gunn was employed during the pleasure of the Board, as 
Chief Engineer in charge of the surveys, and on motion of Mr. 
Heidelbach, Mr. Ernst Kuhl was employed to make the explor- 
ation of the country above spoken of, and the President was au- 
thorized to purchase the necessary outfits and instruments for 
the surveying parties. Additions were made to the two parties 
originally fitted out, from time to time, as the funds in the 
hands of the Trustees and interest of the road required, until 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 33 

the surveys described in a report which was made about March, 
1873, by the Chief Engineer in charge, Mr. Gunn, a copy of 
which is submitted, were completed. Subsequent to the first 
advance by the City Council, and prior to the 12th day of 
March, 1870, a second advance of $10,000 was made by the city 
for the same object as the first. The moneys so obtained having 
been about exhausted, on the 12th of March, 1870, upon my sug- 
gestion a meeting was held by the Finance Committee of the City 
Council and Board of Trustees. To this meeting I submitted a 
bill which was subsequently, on the 25th of March, 1878, passed 
into a law by the General Assembly of the State of Ohio. It 
authorized the City Council to advance to the trustees out of 
any fund of the City, such sum as may be necessary not exceed- 
ing $50,000 for carrying the object for which the Trustees were 
appointed into effect, the sum so advanced to be repaid out of 
the Trust Fund provided for in the original act when raised. 

With this bill I also submitted a memorial to the Senators 
and Representatives of the County of Hamilton in the General 
Assembly, which was signed by the members of the Finance Com- 
mittee and the Trustees present. These three amounts, aggre- 
gating $70,000, were all the moneys obtained from the city, and 
they were repaid on the first sale of $150,000 of the 7 per cent, 
bonds, in August, 1872. The memorial may be found on pages 
44 and 45 of the Minute Book, No. 1, of the Board of Trustees, 
a copy of which memorial I here attach, marked "Exhibit A," 
as a part of this my deposition. 

Having given a statement of the organization of the Board, 
the Surveying Corps, and mode in which the necessary funds 
were obtained from the city to enable the Trustees to carry into 
effect the object of their appointment, I proceed to state, under 
appropriate heads, the history of the execution of the trust so 
far as I took part in it or it came under my observation. 

And first, with regard to the necessary legislation in Ten- 
nessee and Kentucky. 
3 



3'i FOUNDING OF CINCINNATI SOUTHERX RAI^YAY 

As the Tennessee Legislature was first to meet, the Tennessee 
bill was first drawn. In framing this bill it was necessary to 
keep in view the powers granted to the Trustees under the law 
of their appointment, the general law and decisions relating to 
railways, the laws and decisions of Tennessee, and the English 
law on the same subject, the last because it was supposed that 
from the amount of money to be raised it would be necessary 
to resort to English capitalists to get it. Hence, in that part of 
the bill relating to the security of the bondholder, the language 
used in the English statutes and decisions, so far as possible, was 
employed. The draft of the Tennessee bill, together with a me- 
morial, was submitted to the Board on the 9th day of November, 
1869, and Messrs. Bishop, Heidelbach and myself were appointed 
a committee to present the bill and memorial to the Legislature 
of that State. 

Mr. Heidelbach and I went in November to Nashville, where 
we remained several days conferring with the members of the 
General Assembly whose constituents were more directly in- 
terested, and explained to them the provisions of the bill. Mr. 
Bishop subsequently went to Nashville, and took an active part 
towards securing its passage. It became a law, with some ad- 
ditions, on the 20th of January, 1870. The provisions of this 
law were accepted by the Trustees on the 1st of November, 1870. 
[See Minutes No. 1, page 51.] 

A memorial and bill drawn with similar provisions to those 
of the Tennessee Bill were presented to the General Assembly 
of Kentucky on the 7th day of January, 1870, and were referred 
to the Committee on Kailroads in the Senate and House. These 
committees met in joint session on Tuesday evening, the 25th 
of January, for the purpose of hearing argument from all in- 
terested. Hon. John C. Breckinridge had been retained on be- 
half of the Trustees, and I had been deputed also to represent 
them. Mr. Breckinridge and I appeared before the committee. 
He made an eloquent argument and explained fully the provi- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 35 

sions of the bill, and submitted certain amendments we had 
agreed on to obviate objections raised. On the next evening, 
Isaac Caldwell, Esq., of Louisville, addressed the committee on 
behalf of that city, in opposition to the measure. On the succeed- 
ing Monday night, the 31st of January, Mr. Breckinridge replied 
to Mr. Caldwell, and on the next night Mr. Caldwell responded. 
I was at Frankfort during these discussions, counseling and ad- 
vising in regard to the measure, and preparing a brief on the 
constitutionality of the Ohio law under which the Trustees were 
appointed, Mr. Caldwell having taken the ground that it was un- 
constitutional. 

The bill failed at this session, as it did in the succeeding 
year, 1871. It is proper that I should say that Mr. Bishop was 
at Frankfort at both sessions in 1870 and 1871, laboring zealously 
in behalf of the Trustees. I was not at Nashville or Frankfort 
except on the occasions I have mentioned; but while the bills 
were pending I was in constant telegraphic communication with 
those acting in our interest, and no amendment was accepted 
without my advice. 

The bill which failed in 1871 was known as the McKee Bill, 
from having been introduced in the House by the Hon. George 
R. McKee, of Garrard County, Kentucky. 

After the failure of the first bill in 1870, there had been 
passed by the Kentucky Legislature a charter for a railroad un- 
der which it was supposed the Trustees could act. Judge Mc- 
Kee visited Cincinnati for the purpose of learning whether this 
could be done, and I had a long conference with him, explaining 
our powers, and that what we wanted was not what is usually 
called a charter, but an act authorizing us to exercise in Kentucky 
the powers we had under the laws of Ohio. We also went over 
the amendments which he had offered to the first bill and others 
that had been suggested, and the result was that I redrafted the 
bill in these particulars, and as before stated he introduced it. 

As there was no general act of Congress regulating the con- 



36 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

struction and dimensions of bridges over the Ohio River prior to 
December 17, 1872, but as there had been debates in Congress 
and reports of the United States Engineers showing that the pro- 
visions of the act of December 17, 1872, were necessary, it was 
deemed prudent to have an act of Congress authorizing the Trus- 
tees to construct a bridge over the Ohio conforming to the views 
of the engineers. Accordingly a bill for that purpose was drawn 
and General Andrew Hickenlooper was sent to Washington in 
behalf of the Trustees to have it introduced and passed. It was 
introduced in the Senate by the Hon. John Sherman, and in 
the House by the Hon. Job E. Stevenson. While General Hicken- 
looper was in Washington, in January and February, 1871, it 
became apparent that the McKee Bill, then pending in Kentucky, 
would probably fail of passage, and a public sentiment was grow- 
ing up in favor of applying to Congress for the necessary grant 
in Kentucky. Senator Sherman had introduced a bill in March 
of the previous year to incorporate the Cincinnati and Chatta- 
nooga Railroad Company, and named among other incorporators 
the Trustees of the Cincinnati Southern Railway. As the posi- 
tion of corporators in such a company was inconsistent with 
our duty as Trustees, a dispatch was sent to Senator Sherman 
requesting him to withdraw our names. It was thought ad- 
visable, however, that a bill should be drawn to be ready for 
introduction in case we failed in Kentucky. I accordingly drew 
a bill, which was subsequently introduced in February, 1871, 
in the Senate by Senator Sherman, and by Hon. Job E. Steven- 
son in the House. This bill embraced both the bridge over the 
Ohio River and the railway in Kentucky and Tennessee, and was 
entitled "A bill to promote the construction of the Cincinnati 
Southern Railway." 

On the 11th of February, 1871, Messrs. Heidelbach, Bishop 
and myself were appointed a committee to go to Washington 
to procure the passage of this bill, and on the 13th of February 
the Board adjourned, to meet at Washington, on Friday, Feb- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY SI 

ruary 17. The committee, being a majority, did go to Washing- 
ton, and remained there until the adjournment, on the 4th of 
March. Senator Sherman and I appeared before the Committee 
on Commerce of the Senate, and urged the passage of his bill, 
and likewise prepared a communication to the committee, which 
will be found on pages 56, 57 and 58 of Minute Book No. 1 of 
the Trustees. I also appeared with the Trustees' committee, 
City Council committee, and one from Lexington, Kentucky, be- 
fore the House Committee on Roads, etc., and addressed it, ex- 
plaining the provisions of Stevenson's bill, and advocating its 
passage. The House Committee reported favorably, and the 
House passed the bill as presented, without debate, by a two- 
thirds vote, but it failed in the Senate for want of time. 

At the session of the Kentucky Legislature, commencing in 
December, 1871, the McKee Bill was again introduced. By the 
advice of the friends of the railway in Kentucky, it was deter- 
mined to leave the passage of the bill ostensibly to their care, 
or as it was expressed at the time, to make it a "Kentucky 
fight." It was necessary, however, that we should know what 
was being done, and I was, therefore, kept advised by telegraph 
and otherwise. 

I think it is no more than just to myself to state that in 
January, February and March of 1871 and 1872, I ceased to 
attend at the Courl-house to professional business for the pur- 
pose of securing the passage of the bills for the Southern Rail- 
way. The McKee Bill was finally passed and approved on the 
13th of February, 1872. The act as passed had three objection- 
able provisions, and unless they were repealed the Board at 
once determined not to accept under it. Two of these were re- 
pealed at the session, on the 25th of March, 1872, but the other 
was not repealed until the 4th of February, 1873, after which 
the Trustees accepted the law of February 13, 1872, as amended 
in the form on pages 127-8, of Minute Book 1. The ob- 
jectionable provisions were those requiring the Trustees to pay 



38 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

an amount equal to fifty cents per capita for each through pas- 
senger, and twenty-five cents for each passenger for one hundred 
miles; to pay semi-annually into the State treasury an amount 
equal to one per cent, on each one hundred pounds of through 
freight shipped over the road, and to report the lines surveyed, 
and to locate the road as required by a vote of the citizens of 
Cincinnati. All these provisions were repealed. 

In order to give the same security for the bonds by a stat- 
utory mortgage in Ohio, as is given by the Tennessee and Ken- 
tucky acts, and to provide for the occupation of streets, etc., 
and the appropriation of private property in accordance with 
the Municipal Code, and for the purpose of enabling the Trus- 
tees to make a contract for completing and leasing the entire 
line, the act of April 18, 1873, known as the "Wright Bill," 
was drawn on the 5th of February of that year, when it was 
known that the Kentucky act removing the restrictions which 
prevented the acceptance of the original act was passed. This 
completed the legislation deemed necessary in the three States 
and in Congress prior to the work of construction. 

In the next place, I desire to briefly state the history of the 
litigation to test the constitutionality of the act of May 4, 1869, 
under which the Trustees were appointed, and the act of March 
25, 1870, which authorized the advance of $50,000. 

The petition for this purpose was filed on the 12th of April, 

1870, in the Superior Court of Cincinnati, by J. Bryant Walker, 
the City Solicitor, as such, and as a taxpayer of the city, as 
plaintiff, against the city, the Trustees, and the City Auditor. 
To the petition a demurrer was filed, admitting its statements. 
On the 18th of April the questions arising on the demurrer 
were reserved to the General Term, where they were argued in 
briefs submitted by the City Solicitor, Mr. Walker, for the plain- 
tiff, and by myself, for the defendants. On the 4th of January, 

1871, the Court decided in favor of the constitutionality and 
validity of the acts, all the Judges concurring, and dismissed 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 39 

the petition. To reverse this judgment, the plaintiff filed a pe- 
tition in error in the Supreme Court, and the case was argued 
in that Court in October of 1871, by Messrs. Stallo & Kittredge 
and Scribner & Hurd for the plaintiff, and Messrs. Henry Stan- 
bery, W. B. Caldwell and Stanley Matthews for the defend- 
ants. 

I attended on behalf of the Board at Columbus during the 
argument, but took no part in it, except to prepare a brief of 
laws and authorities for the assistance of the counsel of de- 
fendants. 

At the December term (1871) the Supreme Court, all the 
Judges concurring, affirmed the validity of the acts in question. 
The conclusions of the Court were announced in the latter part 
of December, but the opinion was not read until about February, 
1872. 

I have already related how the first seventy thousand dol- 
lars were obtained from the city prior to and under the act 
of March 25, 1870, and shall now state the subsequent financial 
history. 

In February, 1871, it became necessary to procure more 
funds, and as the Board did not wish to issue bonds until Ken- 
tucky had granted the necessary authority to extend the road 
through that Commonwealth, it was determined to borrow from 
the banks in Cincinnati. I accordingly negotiated a loan of 
$30,000 with Mr. Perrin, President of the Third National Bank, 
the Trustees giving the form of obligation which was approved 
at the meeting of February 1, 1871, [Minute Book 1, p. 55,] 
all the Trustees being present except Mr. Hooper, who, I think, 
was in Europe. The money thus obtained being about ex- 
pended, and it not being advisable to apply for further loans 
at that time, it became necessary to either disband our surveying 
parties and quit procuring rights of way along the various routes, 
or to devise other means for these purposes. At the meeting of 
the 7th of July, 1871, I submitted a form of certificate of in- 



40 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

debtedness, which was adopted, the other Trustees present being 
Messrs. Greenwood and Bishop. A copy of this form, which 
will be found on page 62 of Minute Book 1, is hereto annexed 
marked Exhibit — , as part of my testimony. Certificates of 
this kind were issued to employes and persons furnishing sup- 
plies until funds were procured, when they were paid. 

In January, 1872, the Supreme Court having decided in 
favor of the constitutionality of the acts of May 4, 1869, and 
March 25, 1870, it was determined to borrow $30,000 from the 
Third National Bank, and give an obligation in the form to be 
found on Page 66, Minute Book Xo. 1, which I had prepared. 
After the passage of the amendatory act of March 25, 1872, by 
the Kentucky Legislature, and the Trustees being assured that 
their objections to the original act would be removed, it was de- 
termined to issue seven per cent, currency bonds, to be dated 
July 1, 1872, and payable in thirty years, on July 1, 1902 ; and 
accordingly . I prepared a form of bond, which will be found 
on Page 89, Minute Book 1, and drafted a circular, to be found 
on Page 101. 

The bonds then sold ($150,000) were the only ones sold 
before the sale of seven-thirty bonds, in May, 1874. . The whole 
ten millions were issued in this form. At the meeting of April 
25, 1873, Mr. Heidelbach, Mr. Hooper and myself were ap- 
pointed a committee to ascertain in Xew York what kind of a 
bond would be best negotiated, and on what terms. Mr. Heidel- 
bach and I went to Xew York, where we met Mr. Hooper, on 
his return from Europe, and made the necessary inquiries. 

On the 6th of May, 1873, Messrs. Hooper, Heidelbach and 
myself were appointed a committee to prepare a circular and 
pamphlet showing the powers of the Board, and such informa- 
tion as would be useful in negotiating bonds. 

This committee reported on the 27th of June that they had 
prepared the circular dated June 1, together with the laws and 
decisions relating to the road. The circular was written by Mr. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY J,l 

Hooper. At the same meeting, June 27, 1873, Mr. Heidelbach 
and I were appointed a committee to ascertain in New York 
on what terms a loan could be made, in anticipation of the 
sale of bonds. While in New York we visited various bankers, 
who promised to make propositions, but nothing was done. 

On the 2d of September the Board received telegrams and 
letters from New York inviting conference there in regard to 
the sale of seven-per-cent. gold bonds. The Board adjourned 
to meet in New York, and all but Mr. Greenwood went and 
opened a negotiation with a syndicate represented by John W. 
Ellis and others. 

These negotiations continued from the 5th to the 15th of 
September, when they were broken off. Before the Board left, 
however, propositions from other parties had been received, but 
the panic which commenced on the 24th day of September put 
an end to all further efforts for the sale of gold bonds in New 
York. 

Mr. Hooper having determined to return to Europe, where 
his family was, I was directed to prepare a letter of authority 
to him to negotiate in London and on the Continent, the sale 
of $5,000,000 of gold bonds, giving him power for that purpose 
to employ such agents and incur such necessary expenses as was 
usual in the course of such negotiations and sales. This letter 
will be found on page 195 of Minute Book 1. Mr. Hooper's 
authority was continued until July 7, 1874, when he was di- 
rected to cease his negotiations abroad. From the tenor of his 
letters in January, 1874, the Board became satisfied that Mr. 
Hooper would probably fail to effect a sale of gold bonds on such 
terms as would be satisfactory, and determined to try the home 
market for currency bonds. I had had consultations in refer- 
ence to the sales of seven three-tenth currency bonds with Mr. 
W. W. Scarborough, and Mr. R. R. Springer, and others. As 
Mr. Scarborough was to be in New York in March, 1874, I re- 
quested him to make inquiry there in regard to a sale of such 



42 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

bonds. On his return he wrote me the result of his inquiries. 
His letter was presented to the Board at the meeting of March 
31, 1874, and was referred to me with power to act, and to cor- 
respond with the American Exchange National Bank of New 
York, and notify its President that the bank had been appointed 
agent to sell at par and interest $2,000,000 of 7.30 currency 
bonds. At the meeting the 3d of April, I submitted a letter of 
the bank in reply to one of the 1st, asking for further instructions, 
and was directed to prepare a form of advertisement for pro- 
posals for bonds, and to continue correspondence. I thought it 
important that Mr. Scarborough should go to New York and aid 
in making sale of the bonds, and was, accordingly, at the meet- 
ing of the 13th of April authorized to request Mr. Scarborough 
to do so, and give him such letter of instructions as might be 
requisite. Mr. Scarborough went to New York for that purpose, 
first stipulating, however, that he would receive no compensa- 
tion, and to him is largely due the successful sale of the first 
million of 7.30 bonds. Mr. E. R. Springer also, while in New 
York, used his influence for the same object. At the request of 
the Board I went to New York in September to arrange for in- 
viting proposals for the second million of 7.30 's, which the 
American Exchange National Bank were authorized to sell. Be- 
fore going some correspondence had taken place between the 
bank and myself in regard to the sale of the balance of the ten 
millions, and I was authorized to negotiate in regard to such 
sale. While in New York I was also requested to obtain a loan 
of $200,000 in anticipation of sales. I remained in New York 
on this mission during September. The conclusion was certain 
propositions, which resulted in a temporary loan from the bank 
of $200,000, and an agreement for the disposal of the balance 
($8,300,000) of seven-thirty currency bonds. The agreement was 
made after consultation with Messrs. W. W. Scarborough and R. 
R. Springer, and was based upon a proposition prepared by Mr. 
Scarborough. [See Min. Book 2, pp. 15 and 16.] 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY J,3 

I shall next speak of procuring rights of way, depot grounds, 
donation of lands, and location of road. 

Prior to the passage of the first Kentucky act of February 
13, 1872, the Board had received proffers of rights of way and 
donations from committees of citizens along the surveyed routes, 
but no systematic course had been pursued to secure them. At 
the meetings of May 7 and June 4, 1872, I submitted a series of 
forms of deeds for land-grants and rights of way, and also forms 
for rights of way and donations in aid of the fund for the con- 
struction of the road, and also a circular letter to committees 
tendering donations. [See Minute Book 1, pp. 73-83.] These 
forms, or contracts based on them, were used in Kentucky and 
Tennessee in securing the rights of way, land-grants, and dona- 
tions. Under my direction were also prepared the forms of 
ordinances granting the right of way through the streets of New- 
port, Covington, Lexington and Ludlow; also the forms for the 
appropriation of lands for the railway in Tennessee and Ken- 
tucky. 

Before locating the road it was necessary to ascertain upon 
what terms and conditions the Trustees could purchase the Cov- 
ington and Lexington Railroad, the Cincinnati, Lexington and 
East Tennessee Railroad, known as the Lexington and Danville 
or Sinton road, the right to use the Newport and Cincinnati 
Bridge, and so much of the Louisville Short-Line as would pro- 
vide an approach to it, and so much of the Covington and Lex- 
ington turnpike as it would be necessary to occupy if the ridge 
route was taken. In the event that the located line passed 
through Knoxville, it was also necessary to know on what terms 
the railroad known as the Knoxville and Ohio Railroad could be 
purchased, and whether a joint use of the right of way of the 
East Tennessee and Virginia Railroad could be secured. 

Owing to the litigation in regard to the ownership of the 
Covington and Lexington Railroad, and the determination of the 
directors and stockholders of the old company not to take action 



ffl, FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

for its sale until after the directors had full possession of it, 
the negotiations for the purchase of that road were broken off by 
communications dated August 22 and September 2, 1873, which 
will be found on pages 178 and 181 of Minute Book 1. The 
negotiation was not renewed, as the litigation was not ended until 
long after the time fixed by the Kentucky act for the location 
and the commencement of the construction of the Southern Rail- 
way had expired. The failure of the negotiation for the pur- 
chase of the Covington and Lexington Railroad ended the ne- 
gotiations for purchase of the Knoxville and Ohio road and for 
the joint use of the right of way of the East Tennessee and 
Virginia Railroad from Knoxville to Chattanooga. The negotia- 
tions for the former were between the Board of Trustees and C. 
M. MeGhee. the manager of the road, and for the latter be- 
tween Mr. R. T. Wilson, President of the company, and myself, 
on behalf of the Trustees. — [See Minute Book, pages 144, 145.] 

The purchase of the Lexington and Danville road, and all 
its appurtenances and rights of way, was made by deed, accepted 
by the Trustees on the 20th of January, 1874, for the considera- 
tion of $300,000 of the 7 per cent, currency bonds of the city 
issued for the construction of the Southern Railway. The first 
proposition of sale was made to a meeting of the Board, April 
12, 1873, the sum asked being $450,000. At a meeting held on 
the 17th of November, 1873, Mr. Sinton, as President of the com- 
pany, made another proposition, the sum asked being $350,000. 
This proposition was referred to me, to ascertain whether the 
price named was the lowest price, and to examine the title pap- 
ers to the road. The negotiation with Mr. Sinton resulted in the 
purchase, as above stated. 

I found it necessary to go over all the proceedings of the 
Court authorizing the sale of the Lexington and Danville Rail- 
road, and the proceedings of the original purchasers' charter, 
and the proceedings organizing the then owners of the road, the 
Cincinnati, Lexington and East Tennessee Railroad Company, 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY J,5 

together with their proceedings as a company. It was also 
necessary that I should draft all the forms for the company's 
proceedings in making a sale, and the powers of attorney and 
proxies ratifying the sale by the stockholders and the individuals 
for whose benefit the road had been originally bought under the 
decree of the Court, and forms of petition and orders of Court 
perfecting the title 4n the company. I also drew the deed and 
the minutes in regard to the same, and the location of the South- 
ern Railway over the road thus purchased, as shown in the 
Minute Book 1, pp. 228-236. 

The negotiation for the perpetual use and right of way 
over the Newport and Cincinnati Bridge and its approaches was 
commenced by a communication submitted by me at the meeting 
of May 13, 1873. [Minute Book 1, page 143.] 

At the meeting of the 17th of June following, the President 
of the Bridge Company, Alfred Gaither, Esq., submitted a com- 
munication in regard to the occupancy of the bridge, but it be- 
ing thought advisable that whatever was done should be put into 
the form of contracts, ready for execution and acceptance by the 
Trustees, with the Bridge Company, the Little Miami Railroad 
Company, and the other railroad companies interested in the 
bridge and approaches and the "connection track" in Cincin- 
nati, the matter was placed in my hands for negotiation and 
drafting on behalf of the Board. After several conferences in 
August, September, October and November, 1873, with parties 
in interest at Cincinnati, Columbus, New York and Philadelphia, 
and preparing several drafts, I presented to the Board at the 
meeting of the 17th of November, 1873, the letter dated the 14th, 
of Hon. H. J. Jewett, the general counsel for the Newport Bridge 
Company and the railways interested therein, inclosing modifica- 
tion proposed by him to my last draft of contract for the pur- 
chase of a perpetual easement over the Newport Bridge and ap- 
proaches, and also the last draft of a contract for the use of the 



40 FOUXDIXG OF CIXCIXXATI SOUTHERX RAILWAY 

"'connection track." Copies of these final drafts and letter 
are hereto annexed, marked Exhibits D and H. 

At the meeting of the 3d of February, 1874, I was directed 
to obtain further information in regard to the bridge and con- 
nection track, which I did, and reported at the meeting on the 
10th of February. [See Minute Book 1, pages 216 and 251.] 

The negotiation for the use of the track of the Louisville 
Short-line Railroad, in Saratoga street, Newport, to the bridge 
approach, and so far west of Newport as was practicable, was 
conducted by the Board, and through its consulting Engineer 
and attorney in Kentucky, under my directions. Messrs. Green- 
wood, Bishop, .Hooper and myself went to Louisville about the 
19th of July, 1873, and had conference with the Directors of the 
Short-line Road, and subsequently received communications 
from them, but no satisfactory proposition was ever made, and 
for this reason, and others stated in the declaration to the public, 
to be found in Minute Book 1, pp. 233-237 (a copy of which 
is annexed, as- Exhibit J, hereto), the final location from Roberts' 
store to and across the Ohio River was made by way of Ludlow, 
at the meeting at which this declaration was ordered, held Febru- 
ary 12, 1874, the next day, the 13th inst., being the last day of the 
two years allowed by the Kentucky act in which to make it. This 
location will be found on page 253, Minute Book 1. 

The first location in Kentucky was on the 12th of December, 

1873, the day on which the King's Mountain tunnel was let. It 
was for eighty miles from the State line north to a point about 
one mile west of South D anvil 1 e, on the Lebanon branch of the 
Louisville and Nashville Railroad. [Minute Book 1, pp. 208, 
209, 210.] The second location was on the 20th of January, 

1874, on the day of the acceptance of the deed conveying the 
Lexington and Danville, or Sinton road, from the point near 
South Danville, to Roberts' store, in Kenton County, about 
twenty miles from Cincinnati. [Minute Book 1, page 235.] 
The third and final location was as above stated. All the resolu- 



tions and papers, including the declaration to the public, neces- 
sary in making these locations were drawn by me, as were all 
the other papers I mention in my testimony, unless I otherwise 
state. This location on the ridge route required that the rail- 
road should occupy and use for a distance of about thirty miles 
a large part of the road bed of the Covington and Lexington 
turnpike. This fact had been kept in view before locating, in 
obtaining right of way, and they included lands whereon to 
place a new road where necessary. At the meeting of November 
5, 1874, I was appointed a committee to negotiate for the oc- 
cupancy of the turnpike with a committee of the Directors of the 
Turnpike Company — Messrs. Ernst, Chambers and Stephens. 
A long negotiation as to the price and conditions ensued, and 
was closed by a proposition and form of agreement on the 5th 
of March, 1875. [See Minute Book 2, pages 35, 47, 147, 167, 
169.] 

In the event of the. location of the railway as finally made, it 
was deemed proper to procure a right of way as far east as 
Freeman street, for local depot purposes, and to ascertain 
whether the right to use the passenger depot of the Cincinnati, 
Hamilton and Dayton Railroad Company could be obtained. 
Inquiry was accordingly made of that company, and at the meet- 
ing of December 30, 1873, a communication was received and 
presented containing a proposition in regard to a strip of ground 
thirty feet in width, beginning in the west line of the company's 
property, and running east about 1,200 feet to near Carr street, 
as shown on a map prepared by Thomas D. Lovett, the Consult- 
ing Engineer of the Trustees ; also a proposition for right of way, 
as shown on the same map, to the passenger depot of the com- 
pany, and for the use of the depot by the lessees of the Trustees. 
[See Minute Book 1, p. 217.] A letter was subsequently ad- 
dressed on behalf of the Board to the company, which will be 
found on page 301, and the result of the negotiations was that 



4S FOUXDIXG OF CIXCIXXATI SOUTHERX RAILWAY 

the Trustees bought this strip by deed, dated June 30, 1874, to 
be found on Page 349, Minute Book 1. 

I should also state that I took an active part in securing 
the donation from the Ludlow heirs, at Ludlow, Kentucky, of 
land for right of way for road and inclined plane and side 
tracks, and for site of bridge and use of wharf, and donations 
of land from the Eoane Iron Company and others, in Tennessee, 
at Chattanooga and elsewhere. 

In November, 1873, the Board had become satisfied that the 
road would probably be located on the military route south of 
South Danville, and accordingly determined to advertise for 
proposals for constructing the King's Mountain Tunnel, the 
longest tunnel on the line, in Lincoln County, Kentucky, about 
twelve miles south of Stanford. Bids were received on the 
10th of December, and an agreement for its construction en- 
tered into on the 12th, between the Trustees and Bibb & Tabler. 
As this was the first contract, and for the principal earthwork on 
the line, it was subsequently adopted as a form for all gradua- 
tion and masonry. [Minute Book 1, pp. 221.] All the forms 
of contract used in the Department of Construction, which was 
organized on the 13th of January, 1874, [see Minute Book 1, 
pp. 225] as well as these, were drawn by me, also the provisions 
of the specifications necessary to conform them to the contracts. 
[Exhibit — , hereto attached, is the principal form.] 

It was necessary that I should give special services pre- 
liminary to and in making a contract for one other work besides 
the King's Mountain Tunnel, namely, the Ohio River bridge. 
Under the act of Congress of December 17, 1872, prescribing the 
dimensions of bridges over the Ohio, it was necessary to sub- 
mit to the Secretary of War, for his approval, a design and draw- 
ing of the proposed bridge piers and a map of the proposed loca- 
tion. Accordingly I prepared a memorial to the Secretary, and 
had General Andrew Hickenlooper appointed agent of the Board 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY J,9 

to present the same to him, with authority to take the necessary 
steps to secure the requisite permission to build the bridge. [See 
minutes of meeting of July 6, 1874, Minute Book 1, pages 353, 
354.] Objections having been made to the location of the piers 
and width of span, a modification was made in plans and piers, 
and permission given in November, 1874, by the Secretary of 
War for the construction of the bridge now being built. 

In procuring this permission, General Hickenlooper acted 
under my direction and advice. 

At a meeting on Tuesday, January 23, 1875, a conditional 
award for the construction of the Ohio River bridge was made 
to the Keystone Bridge Company, the price being $663,500. It 
was necessary, however, to agree upon the terms of the contract 
and certain stipulations in the specifications. The matter was 
placed in my hands in connection with the Consulting Engineer, 
and was not finally concluded until a month after the conditional 
award. As this contract was of great importance, and required 
to be carefully drawn and considered, it formed the basis for the 
contracts for the other bridges and trestles, the execution of 
which was supervised by me. 

In organizing the Financial Department I prepared forms 
of vouchers, etc., with the aid of the Secretary and Auditor, its 
head. 

In addition to the other special services spoken of, I have 
acted as the general legal counsel in the execution of the trust 
and in the Board from its organization to the present time. 

As a member of the Board from the commencement, in July, 
1869, to the date of the qualification of Mr. Hooper's successor, 
namely : February 19, 1875, the period which the testimony now 
taken covers, I took part in meetings recorded in Minute Book 
No. 1, of 360 pages, and Minute Book No. 2 to page 132, being 
present at nearly every meeting except during the months of 
July, August and September, 1874, preparing all the forms for 
4 



50 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

general orders of the Board, and special minutes for the use of 
the Secretary. 

An inspection of these minutes will furnish the best testi- 
mony of the general services of the Trustees. For the greater 
part of the first three years, until after the passage in February, 
1872, of the Kentucky Act, the Trustees as a Board had compara- 
tively little to do, having in that time sixty meetings. [See 
Minute Book No. 1, pp. 27 to 70.] After that these meetings 
were more frequent until May 12, 1873, when in addition to the 
regular monthly meeting two special meetings on Tuesday and 
Friday of each week were ordered as necessary to transact the 
business of the Board. 

There were also called meetings when emergencies arose, 
and there were services by members of the Board as committee- 
men, which will be found noted in the minutes. 

Q. How many miles of the road are graded to this time? 

A. I can not give an exact statement as to the number of 
miles graded, for the reason that the work is let to different con- 
tractors, but few of whom have finally completed their several 
contracts, and I have never made inquiry of what the aggregate 
number of miles of the graded road is. The road for the pur- 
pose of construction is divided into divisions and lettered from 
A running south from the Ohio River, each division having 
about forty miles. Work is in progress on all these divisions as 
far and including the division Letter G, which will take it to 
the Tennessee Valley. According to the last return of the pay- 
roll of the laborers employed by the several contractors they ag- 
gregate upward of ten thousand, and at the present rate of 
progress all the gradation and masonry under contract can be 
finished by the first day of July, 1876, with the exception of 
one section, No. 178, in Division G, which may take longer, owing 
to the nature of the tunnel on that section. 

Q. Have there been any iron or steel rails delivered? 

A. There have; 1,000 tons of iron rails near South Dan- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 51 

ville, from the Roane Iron Mill Company of Chattanooga, and 
there are also now being delivered at the same place 5,000 tons 
of iron rails by the Cleveland Rolling Mill Company; this lat- 
ter company is also now delivering 3,000 tons of steel rails at 
Ludlow. 

Q. Are the rails paid for as delivered, and at what price? 

A. After passing inspection they are ; the price is fixed 
by the contracts with said companies; ninety per cent, is paid 
when the rails pass inspection. 

Q. By how much do you estimate that the cost of the road 
will exceed the ten millions? 

A. I have never made any exact estimate. My own im- 
pression, from the beginning, has been that the road would not 
cost less than fifteen millions of dollars; accordingly, when I 
drew the "Wright Bill" in February, 1873, I drafted an addi- 
tional section authorizing the issuing of five millions more of 
bonds, but upon the advice of influential citizens, to whom the 
bill was shown, this section was withheld. An estimate of the 
probable cost of the entire road is now being made by the Con- 
sulting or Principal Engineer, Mr. Thos. D. Lovett. 

Q. Is it the purpose of the Trustees to finish the entire road 
to Chattanooga before any portion is used for passengers or 
freight ? 

A. It is not. With means put into our hands by an act 
of the Legislature authorizing an additional issue of bonds the 
cars can be run from the Ohio to the Cumberland River by the 
1st of August, 1876, unless the work of track laying should be 
retarded by an unusually rainy season as the last. 

Q. What number of miles can the rails contracted for lay? 

A. From the Ohio River to the Tennessee Valley. 

Q. Have bonds been sold at the office of the company or 
Trustees at 2.55 premium? If so, how many? 

A. One hundred and fifty thousand of the 7 per cent, cur- 



52 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

rency bonds were sold to the First National Bank of Cincinnati, 
in August, 1872. 

Q. What further opportunity was given for the purchase 
of bonds at the office of the Trustees ? 

A. I think, on the sale of the first million of the seven- 
thirties, proposals were invited at the office, but if not, at 
the bank in Cincinnati. Proposals were received here and 
forwarded to New York, and some bonds were sold here through 
the agent in New York. 

Q. Did the law mean that not less than par should be paid 
at the Treasury of the Trustees for each bond sold ? 

A. Not as I understand it. On the contrary, decisions in 
Ohio, so far as I know them in similar law, are to the effect that 
a Board like this, authorized to raise money by the sale of bonds 
which are commercial paper, may adopt the means necessary to 
effect the sale, according to the usages of the money markets of 
the world. 

Q. If the law intended that the bonds might be sold at 
par, and commissions be allowed and paid, would it be in the 
power of the Trustees to contract for any rate of commissions, 
whether one, two, three, four, five per cent., or more. 

A. It would not. They must for all such services pay 
what would be usual in the money market. 

Q. What prompted the Trustees to dispose of so many 
bonds in such a brief space of time ? 

A. They had a large amount of work contracted for, and 
experience has shown that when you have once started a market 
for bonds of this character, it is better to take advantage of it. 
We accordingly did so, and sold the bonds. 

Q. In your answer to the general question you mention the 
name of R. R. Springer. Did he advise or approve the sale of 
bonds at par, and to pay for such sa 1 ^ or negotiation iy 2 per 
cent, commission? 

A. I believe he did. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 53 

Q. Were the bonds sold in 1875 advertised in Cincinnati, 
Boston, Philadelphia or Baltimore, or any bids invited for the 
whole or any portion of them in either of said cities ? 

A. The bonds were advertised in Cincinnati, and I be- 
lieve in all the other cities named in the question, as well as in 
New York. 

Q. To whom was the \y 2 per cent, commission paid? 

A. It was paid to the American Exchange National Bank, 
of New York, and Kuhn, Loeb & Co., of New York also. 

Q. Did the American Exchange National Bank of New 
York, or Kuhn, Loeb & Co., take any portion of the bonds to their 
own account ? 

A. Whether the American Exchange National Bank took 
any of the bonds to their own account or not, I don't know. I 
do not think they did. However, the bank was the agent of the 
Trustees to negotiate the sale of the bonds in New York. Kuhn,. 
Loeb & Co. were not the direct agents of the Trustees to negotiate 
the sale of bonds, but the American Exchange Bank made a con- 
tract with them to sell through them $1,000,000 of seven-thirty 
currency bonds, and to allow them a commission of one per cent., 
which was to cover all their charges and expenses in making sales. 
They were also to have an option of selling the remainder of the 
seven-thirty currency bonds, amounting to $7,300,000, at the 
same price and rate of commission. 

Q. Did the Trustees invest a large sum in United States 
bonds 1 

A. They did. I think they invested about $2,100,000. 

Q. Have those bonds been sold? 

A. We have still one million of United States bonds; the 
rest have been sold. 

Q. For what reason were they sold? 

A. To provide money for the current expenses of the 
road, and because it was supposed that the time when the most 



54 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

profit could be made out of the investment of the particular class 
of United States bonds sold had come. 

Q. Please state why no contract was made with Thos. D. 
Lovett as to the amount of salary or compensation to be paid him 
for services as Chief Engineer? 

A. A contract was made, but not as to an amount. His 
compensation is to be fixed by the Board. 

[Adjourned to Saturday, December 10, 1875, at 2 P. M.] 

Q. Please name the attorneys that are now retained and 
under pay? 

A. In Kentucky we have C. B. Simrall, Esq., our attorney 
and agent in the State of Kentucky. We have J. B. Beck em- 
ployed as special counsel in cases for the recovery of subscrip- 
tions made to pay the right of way through Fayette County, 
Kentucky. He lives in Lexington. We have a law firm em- 
ployed in Central Kentucky in a case growing out of the failure 
of Barker & Co., contractors. In Tennessee we have one at- 
torney, CD. McGuffey, Esq., and we have W. T. Porter, Esq., 
employed as attorney for the Board in Cincinnati. I have my- 
self acted as the general leading counsel of the Board both in 
session and in matters requiring legal counsel when not in 
session. 

Q. How much are they paid? 

A. The attorney in Cincinnati, Mr. Porter, is paid fifty 
dollars per month. The attorney in Kentucky, Mr. Simrall, has 
been paid three hundred dollars per month, but his business is 
about closed, or will be about the 1st of January, 1876. I think 
Mr. McGuffey 's pay is about three thousand dollars per annum, 
and his duties will be closed, or cease, about the 1st of July next. 
The other attorneys are paid their services as rendered. 

Q. How much was paid to John C. Breckinridge? 

A. I am not sure whether it was $2,000 or $3,000. It was 
not to exceed $3,000. General Breckinridge was originally em- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 55 

ployed as the leading counsel for Kentucky as one of the first 
acts of the Board after its organization, and it was expected that 
he would have charge of the legal affairs of the Trustees in 
Kentucky, but owing to the long delay in procuring the necessary 
legislation in Kentucky and the subsequent failure of his health, 
it became necessary to employ Mr. Simrall, the agent in Ken- 
tucky, to take charge of the major part of the duties that would 
have been performed by and under the direction of General 
Breckinridge. 

Q. Were or are any of the attorneys for the Board related 
to any of the members? 

A. None to my knowledge. 

Q. Was the advertising the bonds in New York, Boston, 
Philadelphia, Baltimore and Cincinnati subsequent to the con- 
tract made for the sale of the $7,300,000 of 7.30 bonds? 

A. All expenses of every nature were paid by Kuhn, Loeb 
■& Co., except the charges of the American Exchange National 
Bank for services in negotiating the sale of the $8,300,000 of the 
'7.30 bonds. The advertisement for the sale of these bonds was 
made after we made the contract with the American Exchange 
National Bank to negotiate the sales. The Trustees never ad- 
vertised the sale of the $8,300,000 7.30 bonds, either before or 
after the contract with the American Exchange National Bank, 
except through the method adopted by the contract itself. 

Q. What did the Newport Bridge Company charge for 
their bridge ? 

A. As shown by the letter of Hon. H. J. Jewett, hereto- 
fore appended to my testimony, they charged $1,250,000. Sub- 
sequent to the letter of Mr. Jewett, viz., 15th of December, 1873, 
the bridge company, through Mr. Alfred Gaither, its President, 
made another proposition, a copy of which I here attach, marked 
Exhibit E, as a part of my deposition, and again, on the 30th of 
January, 1874, Mr. Gaither submitted another proposition, ,a 



•56' FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

copy of which I here attach, marked Exhibit F, as a part of my 
deposition. 

Q. How much shorter is the road now adopted than the 
Kentucky Central to Lexington? 

A. Twenty miles. 

Q. Have you formed an opinion, or has it been stated to 
you by engineers, of the working value of the distance thus 
gained ? 

A. It has been stated to me that it would be equivalent to 
$2,000,000 capital. I have not formed any opinion about it. 

Q. What compensation, if any, did General Hickenlooper 
receive for his services in Washington for the Trustees? 

A. None whatever; his expenses were paid. 

Q. You say the Board adjourned on the 13th of February, 
1871, to meet in Washington on the 17th of February, and that 
the committee of the Board appointed on the 11th of February, 
being a majority, did go to Washington and remained there un- 
til Congress adjourned, qn the 4th of March. Where did the 
Board meet while in Washington, who presided and who acted 
as Secretary, and what was the expense ? 

A. The Board met at Willard's Hotel. I think Mr. 
Heidelbach presided, and I think likely that I acted as Secretary. 
I do not know what the trip cost. 

Q. You say in your answer to the general question that in 
1871, when the McKee Bill was about to fail in the Kentucky 
Legislature, "there was a sentiment growing up in favor of 
applying to Congress for the necessary grant in Kentucky." 
Where did you discover this sentiment growing up or prevail- 
ing? 

A. In Cincinnati and all through Central Kentucky. 

Q. Under what theory did you expect Congress to grant you 
the right to pass through, use and control a portion of the terri- 
tories of the States of Kentucky and Tennessee, without the con- 
sent of said States? 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 57 

A. I had no theory about it — it was not my theory. 

Q. Have you claims on the Cincinnati Southern Railway, 
except for services as Trustee ? 

A. I have not ; I do not see how I could. 

Q. What do you estimate the value of your services as 
Trustee of the Cincinnati Southern Railway from the time of 
your appointment to the date of the appointment of the successor 
of Mr. Hooper, on the 19th of February, 1875 ? 

A. I do not wish to put any estimate upon my services. 
I wish to say, however, that for counsel and legal advice given 
to the Board while in session I do not expect compensation, be- 
cause having accepted the trust and being bound to exercise my 
legal knowledge in the discharge of my duties as a member of 
the Board, I felt bound to impart it and give professional advice 
to my colleagues at the sessions of the Board. In making an 
estimate, I think regard should be had to the kind of services 
performed, the magnitude of the enterprise and the time nec- 
essarily taken from other employments in which compensation 
could be earned. 

[Adjourned. Resumed December 29, 1875, at 1 P. M.] 

Q. You have testified that one million of bonds were ad- 
vertised and sold. Can you tell what the entire cost in ad- 
vertising, commissions, agents, etc., of selling this loan was? 
What was the rate per cent. ? 

A. The rate was about two per cent. The entire cost I 
can not tell; there were some small expenses attending the sale 
of the first million of bonds in addition to the per cent. 

Q. What was the cost per cent, of the eight millions sub- 
sequently sold? 

A. One and a half per cent. 

Q. What was the object or policy of selling the eight mil- 
lions at once, instead of dividing it 1 

A. Because, as I have already stated, with the amount of 



58 FOUNDING OF CINCINNATI SOUTHERX RAILWAY 

contracts we had out and the necessity of pushing the work in 
order to have it done economically it was necessary that we 
should have the money on hand. The very fact of it being 
known that the Trustees had secured the money would enable 
them to make contracts at much lower rates than they otherwise 
could; and likewise to get the work done within a shorter period 
of time. 

Q. Section 1 of the act of May 4. 1869, provided that said 
bonds shall be signed by the President of said Board, and at- 
tested by the City Auditor, who shall keep a register of the sanib, 
and shall be secured by mortgage on the line of railway and its 
net income. Have the Trustees complied with the law above re- 
ferred to? 

A. They have. 

Q. If any mortgage has been made, has it been recorded, 
and where? 

A. Xo mortgage deed has been drawn, but better than that 
has been done. The first section of the Wright Act, of April 18, 
1873, and similar sections in the Kentucky and Tennessee acts, 
give a statutory mortgage to each of the bondholders until his in- 
terest and principal are fully paid. 

Q. At what date or period did the Cincinnati Southern 
Railway assume such form and shape as to make the continuous 
supervision of the Trustees necessary? 

A. About the time that two meetings a week were ordered 
from the date of the passage of the act of February, 1872, by" 
the Legislature of Kentucky, the meetings of the Board were 
more frequent than previous to said date, and continued so until 
the 12th of May, 1873, when two extra meetings a week were 
ordered in addition to the regular monthly meetings. 

Q. What prompted the Trustees to change the rate of 
interest of the bonds from 7 per cent, to 7 3-10 per cent. ? 

A. The panic of September, 1873, induced us to change 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 59 

the interest from 7 per cent, to 7 3-10 per cent., so as to enable 
ns to get money, although it is doubtful whether so large an 
amount could have been raised in the home market for railway 
purposes for a less rate of interest. 

Q. To whom were the 1^ per cent, commission on sale of 
bonds actually paid? 

A. As before stated by me, half per cent, commission was 
paid to the American Exchange National Bank, of New York, 
and the one per cent, was paid to Kuhn, Loeb & Co., of New 
York. 

Q. What progress has been made in laying track; has 
any contract been awarded? 

A. One mile of track on the inclined plane and through 
Ludlow has been laid. No track has been laid on the main line. 
No contract has been made for laying track. 

Q. Have you examined any considerable portion of the 
gradation and masonry of the line of railway now finished ? 

A. I have not. I have only seen that portion near the 
city. The duties that I have had otherwise to perform, as 
Trustee, would have prevented me from making the examination, 
if I had felt competent to judge of the work. All the testimony 
— or rather opinion — that I have heard expressed by those whom 
I believe competent to judge, concur in the conclusion that the 
work is of the very best class, and done at very low rates. I ap- 
pend as an exhibit, marked "G," a table of average prices of 
all contract work, and make it a part of my testimony. 

Q. State what donations have been made by counties, 
towns, and individuals, of lands for track, side track and depots, 
and also of money, to the Cincinnati Southern Railroad. 

A. There have been donated of rights of way over two 
hundred miles. The Trustees have also received sub- 
scriptions for money sufficient to reimburse them for the cost of 
twenty miles more, making the actual right of way one hundred 



60 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

feet wide donated over two hundred and twenty miles. About 
eighty miles have been acquired at the expense of the trust fund 
proper. Of the balance, about thirty-six miles in Tennessee, it 
is estimated that one-third will be donated, and that the re- 
mainder will be obtained at a moderate cost to the Trustees. 
All the right of way in Kentucky, viz : One hundred and ninety- 
eight and one-fifth miles, has been acquired, and is now owned by 
the Trustees. There have been donated by John Stanbaugh and 
the Roane Iron Company, twenty acres of land in Chattanooga 
for depot and shop purposes, and that city has also voted one 
hundred thousand dollars in city bonds as a bonus ' ' to aid in the 
construction of the railway, ' ' for the purchase of lands, and to 
make improvements thereon within the city limits necessary for 
depots, tracks and yards. The Roane Iron Company has also 
given twenty acres of land at Rockwood, Roane County, Ten- 
nessee, for depot purposes, and land has been donated for depots 
and station grounds at about forty other different points along 
the line. It is believed that lands for the same purposes will be 
obtained at other points without cost, outside of Cincinnati. 
I do not think that any donations will be made in Cincinnati to 
the road. The Roane Iron Company has also conveyed 1,500 
acres of mineral lands in Roane County, Tennessee, and various 
other parties have given obligations to convey about 40,000 acres 
of mountain lands in the vicinity of the road in Tennessee. The 
Engineer's estimate of what it would have cost to have acquired 
the right of way and depot grounds, and to have constructed the 
Lexington and Danville, or Sinton road, was about $600,000, 
while the price paid by the Trustees was $300,000 in seven per 
cent, currency bonds. E. A. FERGUSON. 

Note — The exhibits referred to are documents relating to bridge 
contracts and other matters, with which the people are familiar. It is 
not necessary for the public information to reproduce them. 



V. 

Testimony of E. A. Ferguson 

(Before the Investigating Commission.) 

The Commission was appointed by the Trustees of the Sink- 
ing Fund and Board of Public Works of Cincinnati, under a joint 
resolution of the General Assembly of Ohio, passed April 27, 
1878. 

Q. Have you been, from the beginning, one of the Trustees 
of the Cincinnati Southern Railway? 

A. I have. 

Q. Are you the author of what is called the "Ferguson 
Bill," as it passed the Ohio Legislature? 

A. Not in all respects as it passed, but I am the author of 
the bill. 

Q. Was it modified in any material respect? 

A. None — except some restrictions as to the sale of bonds 
at par. 

Q. What particular public reasons led you to prepare that 
bill? 

A. The first public event that I have a recollection of, in 
Cincinnati, was the illumination, in February, 1836, because the 
Kentucky Legislature had, just then, passed the charter of the 
road known as the Cincinnati, Louisville & Charleston Railway. 
It was to be a road from Charleston to some point in the interior 
of Kentucky, after crossing the Blue Ridge, and then to have 
three branches — one to Maysville, one to Louisville, and another 
to Cincinnati. I was a mere boy at the time, and I was 
thoroughly impressed with the splendor of the illumination; the 

(61) 



62 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

snow began to fall about dusk, and it was the most beautiful 
sight, of the kind, that I ever witnessed. From that time forth 
I have been a Southern Railway man. A Southern railroad has 
been the chronic want of Cincinnati. In my judgment, without 
a Southern railway, Cincinnati, comparatively speaking, would 
be a pleasant, educational, cultured town, a good place for a man 
of means and family to retire to. Without it, as a commercial 
city, relatively, Cincinnati would be nothing. Various attempts 
had been made, prior to my drafting this bill, to provide this 
want ; the principal one towards it, was the one million dollar 
subscription, as it was called, raised in the year 1859 or '60. 
Mr. Samuel H. Goodin had also prepared a plan, but nothing had 
ever been accomplished. In July, 1868, I had been preparing a 
brief, for an argument in the Supreme Court, in the case of 
Hatch v. The Cincinnati & Indiana Railroad Company, involving 
the title of the company to the canal-bed, which had been ap- 
propriated for railway purposes. After the preparation of that 
brief I took a short vacation and went to New York City. One 
Sunday evening, while there, Mr. J. W. Sweeney, who was a 
freight agent of some of the railroads, came up to certain Cin- 
cinnati merchants, among whom, I believe, were Messrs. Clement 
I. Acton, George W. McAlpin, Louis Seasongood, and Benjamin 
May. Mr. Sweeney's visit to them was to give them a hint that 
there was to be a change of rates, and that they had better hurry 
their shipments. This led to a talk about railway facilities at 
Cincinnati; and about the fact that Cincinnati was losing her 
business; that she was being cut off from the entire trade 
of the Northwest ; that she had formerly had a large trade in 
Iowa, but that was leaving or had about left her ; that the great 
want of the city was a railroad to establish an empire of trade 
— and that empire of trade was the South; that was the only 
place for Cincinnati trade. It was lamented that under the 
Constitution of Ohio, the city, without co-operative capacity, 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 63 

could do nothing toward building the road. The brief of which 
I have spoken, had led me to consider the constitutional and legal 
questions, which were involved in this subject of the city's build- 
ing a road. Not the question so much as the case bearing upon 
it. I said to the gentlemen, "you are mistaken about the con- 
stitution of Ohio; it is not as you suppose. Under the present 
constitution, Cincinnati can do, what she could have done under 
the former constitution, with this difference : She can not go 
into partnership with anyone else to accomplish an object. Any 
public object which is for the city's interest can be done as well 
under the present constitution as under the former constitution. ' ' 
I instanced to them the fact, that while the City of Cincinnati 
could not own a share in the gas company, and it was not es- 
sential to her public interest that she should, as she had a 
contract with the present gas company, who were able to furnish 
gas cheaper probably, than she could make it herself; that she 
could buy the gas works and become a gas manufacturer and 
supply private consumers; and that the people had voted three 
millions of dollars for that very purpose. In other words, the 
prohibition was against the city being a stockholder and not 
against accomplishing a public object out of her own means. 
I wound up by saying, ' ' I believe, when I get home, I will draw 
a little bill to see what can be done under this democratic con- 
stitution. ' ' The constitution had been spoken of as a democratic 
constitution, and all the gentlement present I belieye were re- 
publicans but myself. The next morning I met Mr. Julius 
Dexter in the reading room of the Fifth Avenue Hotel — he had 
just come from Newport. I related to him the conversation of 
the previous evening, and told him what I proposed to do. After 
I returned home in the fall of that year, I was taken sick, and 
having leisure I thought of this project, and set down one day 
to see how I could draft a bill to meet the case. I roughly 
sketched the first section; when I had done that I became satis- 



64 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

fied that it could be done. I subsequently finished the first draft 
of the bill, and that was given to the public and published on the 
twenty-fifth of November, 1868 — ten years ago last Monday, 
and was commended by the entire press. When the legislature 
convened in January, 1869, the project of changing the con- 
stitution of the State so as to enable the city to make sub- 
scriptions to a railway was presented and considered, but failed 
of passage ; thereupon Mr. G. M. D. Bloss came to me and asked 
for a copy of my bill, saying that he intended to prepare an edi- 
torial for the Enquirer, reviving that plan, and did so; that 
called public attention to it. It was taken into consideration 
by committees of the City Council, Chamber of Commerce and 
the Board of Trade. The result was that it was presented to the 
legislature, and without my going through its entire history, on 
the fourth of May, 1869, became a law. I may say, that so far 
as any man devotes his life to an object — that from the time the 
bill was revised and sent to the legislature, and upon my ap- 
pointment and becoming a trustee, which was without my solici- 
tation, but at the solicitation of friends of the enterprise — I have 
subordinated myself to the accomplishment of the object — the 
building of the Cincinnati Southern Railway. I have literally 
given up ten of the best years of my life to it. I was forty-two 
years old when I wrote the bill, and I was fifty-two years old my 
last birthday. I have neglected my private and professional 
affairs to make this road a success. For three months at a time 
I have not gone to the court-house — that may not be literally 
true, but it is nearly so — that completes my statement of the 
public reasons that controlled me. 

Q. We see that the Act provides for the appropriation of 
ten millions of dollars to construct the road. Did you at that 
time deem that sum sufficient for the purpose ? 

A. Of course when the bill was presented a blank was left 
as to the amount to be appropriated. The blank was filled with 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 65 

ten millions, not upon the idea that ten millions would build the 
road, but that it was all that should then be provided, for two 
reasons : First, it was not good policy to so fix the sum that the 
people of Kentucky and Tennessee, who would be largely bene- 
fited, would feel that they should not contribute; for the Bill, 
as drawn and passed, had a provision for donations. Secondly, 
it would not do to appal the public with the amount of money 
that would probably be necessary to carry out so large a work 
as this must necessarily be. These were considerations which 
influenced the friends of the enterprise in filling the blank with 
$10,000,000. I myself had not given thought at that time as to 
how much would be required. I subsequently thought it would 
probably take about fifteen millions of dollars. 

Q. The Act provides that the bonds to be issued should be 
secured by a mortgage on the line of railway and its net income, 
if it was probable that the ten millions would not finish the rail- 
road, and subsequent loans for that purpose would have to be 
procured? Did not the provision of the Act alluded to seriously 
invalidate or impair the value of subsequent issues ? 

A. I think not; on the contrary without such a provision, 
I doubt whether we could have raised the money for the project 
at all. It is the same, however, as I believe is made for the 
bonds of the Central Park of New York. The money is trust 
money, to be devoted to a special object, and secured to the trust. 
"What the city said when she went into the markets to invite 
capitalists to take the ten millions of bonds, was about this : 
We desire to make a loan of ten millions. We have provided a 
Board of Trustees, appointed by a court, irremovable except for 
cause, and their successors to be appointed in the same way. 
The money that you lend will be placed in the hands of these 
Trustees, to be expended by them for this purpose, and until 
you are repaid you will hoM the road and its net income, and 
also have the pledge of faith of the City, and a tax to be an- 
5 



66 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

nually levied, sufficient with this net income, to pay the in- 
terest and provide a sinking fund for the ultimate payment of 
your money. Without these provisions — (the project being 
novel), the idea of the City building and owning a road, being 
new — I do not believe the bonds could have been sold. 

Q. Did you suppose, then, that the expenditure of ten mil- 
lions thus secured by mortgage, and becoming a prior lien on 
the road, would give such additional value to any other additions, 
to be subsequently issued, to make them equal in value ! 

A. Not particularly. 

Q. Is it your opinion that if the bonds had been issued as 
municipal bonds simply, and not as railway bonds, that the 
value of them would have stood higher in the market ! 

A. At the first, no. Eailway bonds when we made our 
first issue were popular bonds. For the first one hundred and 
fifty thousand dollars we got a little over one hundred and two 
from the First Xational Bank of Cincinnati. If we had had 
the necessary legislation promptly provided in Kentucky and 
Tennessee, all the bonds could have been readily placed in the 
German market at par. That is my recollection of our informa- 
tion obtained from Mr. Heidelbach. I know that was Mr. 
Heidelbach's opinion. But changes took place. The railway 
disasters came, and railroad bonds became unpopular. We sub- 
sequently put forth prominently, therefore the idea of municipal 
bonds. They are municipal bonds as much as any bonds ever 
issued by the city. They are the bonds of Cincinnati, just as 
legitimately as bonds issued for water-works or any other pur- 
pose, and stand upon the same legal footing. If the city has 
not the power to issue them for this purpose, she has not the 
power to issue them for any purpose under the laws and de- 
cisions. 

Q. And you think the same of the subsequent issue of six 
millions and the proposed issue of two millions more? 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 67 

A. I do. But there are certain requirements of our con- 
stitution which must be followed in passing laws. And the 
question on the last two million bill is now pending in the Su- 
preme Court as to whether or not these requirements have been 
observed. It was easy enough to have done so, and I drew what 
is called the Lord bill, which if passed, no one could have 
questioned. 

Q. Had you any previous experience in railroad building 
when you were appointed a Trustee ? 

A. I had not. I had only had experience as a Legislator, 
being on the Railway Committee in the Senate in 1860 and 1861, 
when what was known as the reorganization law was passed, 
and my experience as a lawyer. 

Q. Was there among the Trustees, any division of duties, 
and if so, did any particular line of duty devolve upon you by 
any understanding? 

A. The law itself made the President of the Board the 
acting Trustee, with such power as the Board from time to time 
conferred upon him, that is the only division contemplated by 
law, but, both as the author of the plan and as the only lawyer in 
the Board, and all legal questions, and all questions of policy, 
depending upon the plan, fell to my lot, or were referred to me. 

Q. Did you take an active part in procuring Legislation in 
Kentucky and Tennessee? 

A. My recollection is that the Tennessee Legislature met 
first, I therefore drew the bill for Tennessee first. In framing 
this bill, it was necessary to keep in view the powers granted 
to the Trustees under the law of their appointment, the general 
law and decisions relating to railways, the laws and decisions of 
Tennessee, and the English law on the same subject; the last 
because it was supposed that from the amount of money to be 
raised, it would be necessary to resort to English capitalists to 
get it, hence, in that part of the bill relating to the security of 



68 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

the bond-holder ; the language used in the English statutes, and 
decisions, so far as possible was employed. The draft of the 
bill, together with the memorial, was submitted to the Board on 
the 9th day of November, 1869, and Messrs. Bishop, Heidelbach 
and myself were appointed a committee to present the bill and 
memorial to the Legislature of that State. Mr. Heidelbach and 
I went in November to Nashville, where we remained several 
days, conferring with the members of the General Assembly, 
whose constituents were more directly interested, and explained 
to them the provisions of the bill; Mr. Bishop subsequently 
went to Nashville, and took an active part towards securing its 
passage. It became a law, with some additions, on the twentieth 
of January, 1870, the provisions of this law were accepted by 
the Trustees on the first of November, 1870, and will be found 
on page 5, of book No. 1, of the minutes. A memorial and bill 
drawn with similar provisions to those of the Tennessee bill, 
were presented to the General Assembly of Kentucky, on the 
seventh of January, 1870, and were referred to the Committee 
on Railroads in the Senate and in the House. These Commit- 
tees met in joint session on Tuesday evening, the twenty-fifth 
of January, for the purpose of hearing arguments from all in- 
terested. Hon. John C. Breckinridge had been retained on be- 
half of the Trustees, and I had been deputed also to represent 
them. Mr. Breckinridge and I appeared before the Committee. 
He made an eloquent argument, and explained fully the pro- 
visions of the bill, and submitted certain amendments we had 
agreed on to obviate objections raised. On the next evening, 
Isaac Caldwell, Esq., of Louisville, addressed the Committee 
on behalf of that city, in opposition to the measure. On the 
succeeding Monday night, the thirty-first of January, Mr. 
Breckinridge replied to Mr. Caldwell, and on the next night 
Mr. Caldwell responded. I was at Frankfort during these dis- 
cussions, counseling and advising in regard to the measure, and 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 69 

preparing a brief on the constitutionality of the Ohio law under 
which the Trustees were appointed, Mr. Caldwell having taken 
the ground that it was unconstitutional. The bill failed at this 
session, as it did in the succeeding year, 1871. It is proper that 
I should say that Mr. Bishop was at Frankfort at both sessions 
in 1870 and 1871, laboring zealously in behalf of the Trustees, 
and no man ever worked harder than Mr. Bishop did. I was 
not at Nashville or Frankfort, except on the occasions I have 
mentioned; but while the bills were pending, I was in constant 
telegraphic communication with those acting in our interest, 
and no amendment was accepted without my advice. The bill 
which failed in 1871 was known as the McKee bill, from having 
been introduced in the House by the Hon. George R. McKee, of 
Garrard County, Kentucky. After the failure of the first bill 
in 1870, there had been passed by the Kentucky Legislature, a 
charter for a railroad under which it was supposed the Trustees 
could act. Judge McKee visited Cincinnati for the purpose of 
learning whether this could be done, and I had a long conference 
with him explaining our powers and that what we wanted was 
not what is usually called a charter, but an act authorizing us 
to exercise in Kentucky, the powers we had under the laws of 
Ohio. We also went over the amendments which he had offered 
to the first bill and others that had been suggested, and the 
result was that I re-drafted the bill in these particulars, and as 
before stated he introduced it. As there was no general act of 
Congress regulating the construction and dimensions of bridges 
over the Ohio river prior to December, 1872, but as there had 
been debates in Congress, and reports of the United States 
Engineers showing that the provisions of the act of December 
17, 1872, were necessary, it was deemed prudent to have an act. 
of Congress authorizing the Trustees to construct a bridge over- 
the Ohio conforming to the views of the Engineers. Accord- 
ingly a bill for that purpose was drawn, and General Andrew 



10 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

Hickenlooper was sent to Washington on behalf of the Trustees 
to have it introduced or passed. It was introduced in the Sen- 
ate by the Hon. John Sherman, and in the House by the Hon. 
Job E. Stevenson. While General Hickenlooper was in Washing- 
ton in January and February, 1871, it became apparent that 
the McKee bill, then pending in Kentucky, would probably fail 
of passage, and a public sentiment was growing up in favor of 
applying to Congress for the necessary grant in Kentucky. 
Senator Sherman had introduced a bill in March of the previous 
year to incorporate the Cincinnati & Chattanooga Railroad 
Company, and named among other incorporators the Trustees 
of the Cincinnati Southern Railway. As the position of cor- 
porators in such a company was inconsistent with our duty as 
Trustees, a dispatch was sent to Senator Sherman requesting 
him to withdraw our names. It was thought advisable, how- 
ever, that a bill should be drawn to be ready for introduction 
in case we failed in Kentucky. I accordingly drew a bill, 
which was subsequently introduced in February, 1871, in the 
Senate by Senator Sherman, and by Hon. Job E. Stevenson in 
the House. This bill embraced both the bridge over the Ohio 
river and the railway in Kentucky and Tennessee, and was en- 
titled "a bill to promote the construction of the Cincinnati 
Southern Railway. ' ' On the eleventh of February, 1871, Messrs. 
Heidelbach, Bishop and myself were appointed a committee 
to go to Washington to procure the passage of this bill, 
and on the thirteenth of February the Board adjourned to meet 
at Washington on Friday, February 17th. The committee, be- 
ing a majority, did go to Washington, and remained there until 
the adjournment, on the fourth of March. Senator Sherman 
and I appeared before the Committee on Commerce of the Senate 
and urged the passage of his bill, and likewise prepared a com- 
munication to the committee, which will be found on pages 56, 
57 and 58 of Minutes No. 1, of the Trustees. I also appeared 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 71 

with the Trustees Committee (City Council Committee and one 
from Lexington) before the House Committee on Roads, etc., 
explaining the provisions of Stevenson's bill, and advocating 
its passage. The House Committee reported favorably, and the 
House passed the bill as presented, without debate, by a two- 
thirds vote, but it failed in the Senate for want of time. At 
the session of the Kentucky Legislature, commencing in Decem- 
ber, 1871, the McKee bill was again introduced. By the advice 
of the friends of the railway in Kentucky, it was determined to 
leave the passage of the bill ostensibly to their care, or as it 
was expressed at the time, to make it a "Kentucky fight." It 
was necessary, however, that we should know what was being 
done, and I was, therefore, kept advised by telegraph and other- 
wise. The McKee bill was finally passed and approved on the 
thirteenth of February, 1872. The act as passed had three ob- 
jectionable provisions, and unless they were repealed the Board 
at once determined not to accept under it. Two of these were 
repealed at the session, on the twenty-fifth of March, 1872, but 
the other was not repealed until the fourth of February, 1873, 
after which the Trustees accepted the law of February 13, 1872, 

as amended in the form on pages 127-8, of Minute Book 1. 
The objectionable provisions were those requiring the Trustees 
to pay an amount equal to fifty cents per capita for each through 
passenger, and twenty-five cents for each passenger for one hun- 
dred miles; to pay semi-annually into the State Treasury an 
amount equal to one per cent, on each one hundred pounds 
of through freight shipped over the road, and to report the line 
surveyed, and to locate the road as required by a vote of the 
citizens of Cincinnati. All these provisions were repealed. In 
order to give the same security for the bonds by a statutory 
mortgage in Ohio, as is given by the Tennessee and Kentucky 
acts, and to provide for the occupation of streets, etc., and the 
appropriation of private property in accordance with the 



72 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

municipal code, and for the purpose of enabling the Trustees to 
make a contract for completing and leasing the entire line, the 
act of April 18, 1873, known as the "Wright bill," was drawn 
on the fifth of February of that year, by me ; when it was known 
that the Kentucky act removing the restrictions which pre- 
vented the original act from being accepted had passed ; this 
completed the legislation in the three states, and in Congress 
prior to the work of construction. 

Q. What litigation grew out of the legislation procured, 
and how did it result? 

A. The constitutionality of the Act of May 4, 1869, under 
which the Trustees were appointed, and the Act of March 25, 
1870, which authorized the advance of fifty thousand dollars, 
was drawn in question by a petition for this purpose, filed on 
the twelfth of April, 1870, in the Superior Court of Cincinnati, 
by J. Bryant Walker, the City Solicitor, as such, and as tax- 
payer of the city, as plaintiff against the city, the Trustees, and 
the City Auditor. To this petition a demurrer was filed, admitting 
its statements. On the eighteenth of April, the questions aris- 
ing on the demurrer were reserved to the General Term, where 
they were argued in briefs submitted by the City Solicitor, Mr. 
Walker, for the plaintiff, and by myself, for the defendants. 
On the fourth of January, 1871, the Court, in General Term, de- 
cided in favor of the constitutionality and validity of the Acts, 
all the Judges concurring, and dismissed the petition. To re- 
verse this judgment, the plaintiff filed a petition in error, in the 
Supreme Court, and the case was argued in that Court, in 
October of 1871, by Messrs. Stallo & Kittredge, and Scribner & 
Hurd, for the plaintiff, and Messrs. Henry Stanbery, W. B. 
Caldwell, and Stanley Mathews, for the defendants. I attended 
the Court during the argument, and took no part in it except 
to prepare a brief of laws and authorities, for the assistance of 
the counsel of defendants. At the December term, 1871, the 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 13 

Supreme Court, all the Judges concurring, affirmed the validity 
of the Acts in question. The conclusions of the Court were 
announced in the latter part of December, 1871, but the opinion 
was not read until about February, 1872. 

Q. Taking the matter as a whole, was the legislation pro- 
cured in the several States, consummated in accordance with 
your wishes? 

A. Not altogether, but after discussion had arisen, better 
than I could have expected. 

Q. It has become a public question whether the Trustees 
appointed by the Court, under the so-called "Ferguson Bill" 
hold office by vested tenure, that can not be changed except by 
death, resignation, legal process, or concurrent legislation in 
Ohio, Kentucky, and Tennessee. Have you any opinion upon 
that? If so, state it, if you feel free to do so. 

A. That is undoubtedly the case. It was intended that 
the Trustees should hold an office that could not be changed ex- 
cept by death, resignation, etc. It was, undoubtedly, the under- 
standing of the purchasers of the ten million bonds. It would 
be a breach, not only of contract, but of faith, to attempt any 
other change than that which was contemplated by the original 
Act. I might add that, in addition to this concurrence of the 
Legislatures, it would be necesary to have the concurrence of 
the City of Cincinnati, and each individual bondholder of the 
ten million of bonds. As long as the city owns the Southern 
Railway some amount — say half a million of dollars — o,f the 
first issue of bonds should be kept outstanding, because under 
them, or with them outstanding, the trust powers continue, and 
they become a safeguard to any hostile legislation against the 
road. 

Adjourned until 2 P. M. 



7// FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

AFTERNOON SESSION. 

Mr. Ferguson on the stand. 

Q. Have you in your mind, the aggregate cost of Legisla- 
tion, in the several States? 

A. I have not; I stated this morning all that I had to do 
with it personally. 

Q. Did you give personal attention to the numerous sur- 
veys made before the location of the line, and do you think the 
line adopted was the best? 

A. Before any location was made, the Board went over 
all the various routes; I may say laboriously; — at least it was 
labor for me. 

Q. You do not mean that you went over the ground? A. 
No, sir; over the preliminary surveys; how long it took I cannot 
now recollect, but we were at it for several nights pretty late ; 
I know that I would get very wearied. As to the other point 
comprehended in the question, that can not be well answered 
completely. Before any selection of the route was made, we 
had an estimate of Mr. Gunn's, as to the probable cost of the 
several routes, and we had a comparison — a percentage compari- 
son by Mr. Lovett — not of the cost in figures, but the percentage 
comparison. Upon considering the profiles, and this percentage 
comparison we determined to adopt what is known as the 
"Military Route," and located upon that, from the Tennessee 
and Kentucky State Lines, north eighty miles, to a point about 
one mile west of South Danville. This location was made De- 
cember 12, 1873, and so far as that route is concerned I am 
satisfied it was the best location — at least I was satisfied then — 
while I have not entered into an examination of it critically 
since that, I am satisfied yet, that it was correct. 

Q. Were there any negotiations looking to the purchase 
of the Kentucky Central Railroad seriously entered into; if so, 
please state the nature of them ? 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 7~> 

A. The purchase of the Kentucky Central Railroad was 
provided for by me, in the Kentucky act; and was seriously en- 
tertained at the time, and up to the period of our location, and 
where we would pass Lexington to the north — well, not up to 
that time, to be correct chronologically — but up to the time when 
it would have been practical to purchase that road, the matter 
was seriously contemplated. My personal relations with Mr. 
George H. Pendleton, were such that I could talk frankly with 
him; also, Governor Stevenson, who was largely interested in 
the road, and was Governor of the State of Kentucky, and it 
was desirable that there be no antagonism on the part of that 
road to our enterprise ; and the extension of the Kentucky Cen- 
tral, had always been considered in looking for connections, and 
as such had always been considered, I assured Mr. Pendleton 
and Governor Stevenson, that they should be fairly dealt with, 
that no powers we should obtain from the State of Kentucky, 
should be exercised to the injury of their interests — that our ob- 
ject was to get a road from Cincinnati to the South. I main- 
tained that spirit throughout, and after the location was made 
which determined that we could not take the Kentucky Central, 
I then put the question to Mr. Pendleton whether I had fulfilled 
the assurance I had given him, and he said that I had so far as 
was in my power. The fact about the Kentucky Central Rail- 
road is this : If the case in the Kentucky Court of Appeals had 
been decided in favor of the Bowler estate, I have no doubt that 
the Kentucky Central Railroad would have been bought. 
Whether it was the best thing to do I do not pretend to say. 
It was like another matter, the bridge. We were governed by 
circumstances. The decision in the Bowler case was adverse to 
the Bowler estate, and that brought in the old company. The 
minutes of the Trustees will show that we had correspondence 
with them, and had replies from the officers of the old company 
that, while they had the decision in their favor, they had not 



76' FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

entered into possession of their property, and until they did 
they would not consider any terms of purchase. They did not 
come into possession of that property until long after the time 
had expired in which we were to make the location in Kentucky. 
Hence they had no property for sale, and we could not buy. 
When the settlement was made between the Bowler interest and 
the old company, one of the conditions, according to my recollec- 
tion, is that the Northern terminus of that road shall be Coving- 
ton. I have stated in my former testimony before the com- 
mission to fix compensation of the Trustees, and I am satisfied 
that it was correct — as follows: "Owing to the litigation in 
regard to the ownership of the Covington & Lexington Railroad, 
and the determination of the directors and stockholders of the 
old company not to take action for its sale until after the 
directors had full possession of it, the negotiations for the 
purchase of that road were broken off by communications dated 
August 22 and September 2, 1873, which will be found on pages 
178 and 181 of Minute Book 1. The negotiation was not re- 
newed, as the litigation was not ended until long after the time 
fixed by the Kentucky act for the location and the commence- 
ment of the construction of the Southern Railway had expired. " 
Mr. Zinn came to me on one occasion, when the sale of the road 
was spoken of, and said that they had no power to make the 
same. I turned to the Kentucky law and showed him they had, 
and told him I had drafted a provision especially to enable them 
to sell the road ; showing him we had the power specially put in. 
Section 9 of the Act of Kentucky provides for the purchase. 

Q. I see in the report of May 16, 1873, made to the Board 
by Mr. Lovett, Consulting Engineer, of a percentage comparison 
of the several routes you have alluded to, in his communication 
he says in parenthesis: "Assuming that the Kentucky Central 
"Road can be purchased at the old offer of three millions from 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 77 

Covington to Paris, three millions three hundred and thirty 
thousand to Lexington." Do you remember any such offer? 

A. No, sir, it has passed from my recollection. 

Q. This paper is dated one day before that meeting in 
Paris. Do you know who the offer was from ? 

A. No, sir, I do not. Of course I have a recollection of 
hearing of offers. I heard of confidential offers that came from 
good sources — not from Mr. Pendleton; that their price was 
four millions of dollars. I got that some way confidentially 
from some person, and it was a gentleman of such standing that 
I knew their price would be four millions. I could not mention 
the name of the person now, as I do not remember. 

Q. Will you state the reasons, as you understood them, 
why the trustees determined to build the bridge across the Ohio 
river, at Ludlow, instead of purchasing the use of Newport 
bridge; and what negotiations, if any, were had with regard to 
the latter? 

A. The negotiation for the perpetual use and right of 
way over the Newport and Cincinnati bridge and its approaches 
was commenced by a communication submitted by me at the 
meeting of May 13, 1878. (Minute Book 1, page 143.) At the 
meeting of the seventeenth of June following, the president of 
the Bridge Company, Alfred Gaither, Esq., submitted a com- 
munication in regard to the occupancy of the bridge, it being 
thought advisable that whatever was done should be put in the 
form of contracts, ready for execution and acceptance by the 
Trustees, with the Bridge Company, the Little Miami Railroad 
Company, and the other Railroad Companies interested in the 
bridge and approaches and the "connection track" in Cincinnati. 
The matter was placed in my hands for negotiation and drafting 
on behalf of the Board. After several conferences in August, 
September, October and November, 1873, with parties in in- 
terest at Cincinnati, Columbus, New York and Philadelphia, 



78 FOUXDIXG OF CINCINNATI SOUTHEBX RAILWAY 

and preparing several drafts. I presented to the Board at the 
meeting of the seventeenth of November, 1873. the letter dated 
the fourteenth, of Hon. H. J. Jewett. the general counsel for 
the Newport Bridge Company and the railways interested 
therein, inclosing modification proposed by him to my last draft 
of contract for the purchase of a perpetual easement over the 
Newport bridge and approaches, and also the last draft of a 
contract for the use of the " ; connection track." At the meet- 
ing of the third of February. 1874. I was directed to obtain 
further information in regard to the bridge and connection 
track, which I did. and reported at the meeting on the tenth 
of February. (See Minute Book 1. pages 216 and 251.) The 
negotiation for the use of the track of the Louisville Short-Line 
Railroad, in Saratoga street. Newport, to the bridge approach, 
and so far west of Newport as was practicable, was conducted 
by the Board, and through its consulting engineer and attorney, 
in Kentucky, under my directions. I may say that the Louis- 
ville Short-Line Railroad occupied the entire line of Saratoga 
street, and we could not get to the bridge without going over 
Saratoga street or condemning an independent line. Messrs. 
Greenwood. Bishop and myself, went to Louisville about the 
nineteenth of July. 1873. and had conference with the Directors 
of the Short-Line Road, and subsequently received communica- 
tions from them, but no satisfactory proposition was ever made. 
For this reason, and others stated in the declaration to the 
public, to be found in Minute Book 1. pages 233-237. the final 
location from Roberts' store to and across the Ohio River, was 
made by way of Ludlow, at the meeting at which this declaration 
was ordered, held February 12, 1874, the next day, the 
thirteenth inst, being the last day of the two years allowed by 
the Kentucky Act in which to make it. This location will be 
found on page 253. minute book 1. The declaration to the 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY VJ 

public which I have mentioned I desire to be part of my testi- 
mony. It is as follows: 

The Board of Trustees, of the Cincinnati Southern Rail- 
way, have this day located said railway from Roberts' Store, 
distant about twenty-two miles south of Cincinnati, north- 
wardly to the northern boundary line of Kentucky, and across 
the Ohio river, to Home street, Cincinnati, on what is known as 
the Ludlow route. In making this announcement, the Trustees 
deem it proper to state that they have been governed, in their 
selection, by the following, among other reasons: 

1. The line, by this route and crossing, is the most direct 
between Cincinnati and the line as heretofore located in Ken- 
tucky, on what is known as the Ridge route. 

2. It connects directly with all the railroads entering the 
city from the North, West and East, except the Little Miami, 
which has, however, a direct connection with the Cincinnati 
Southern Railway, at Walton, twenty miles out, by the Newport 
Bridge and the Louisville Line, a road of the same gauge as the 
Little Miami. 

3. It is the cheapest, to construct, of any of the routes 
surveyed. It has no tunnels, but two high trestles, and although 
its grade, for the first five miles, is sixty feet, it is the same as 
that on the bridge approach, and can and will be operated with 
the same power as the latter. 

4. It affords ample depot, switch and transfer grounds, 
and yard room, both at Ludlow and Cincinnati, for a large 
business, which will necessarily concentrate near the bridge ap- 
proaches. In Ludlow, and along the river bank to West Coving- 
ton, the Ludlow heirs and others have donated and deeded, to 
the Trustees, for these purposes, upward of fifteen acres, suffi- 
cient for three miles of side track. 

5. It will enable the Trustees to locate the local freight and 
passenger depots as near the business center of the city as those 
of the Cincinnati, Hamilton & Dayton Railroad, without cross- 
ing streets not now obstructed by railroads. 

Notwithstanding these advantages, the Trustees are sensible 
of the weighty arguments that can be made why they should 
have selected the line by Fowlers' Creek, to the Willow Run 
Crossing, or to the Newport Bridge. As to the first, with the 
means at the disposal of the Trustees, its excess in cost of the rights- 
of-way, both in Covington and Cincinnati, would, of itself, have 
been a very serious objection; but it is also liable to the double 
objection of not only requiring a new bridge, but a bridge at a 
point where the Trustees do not believe the United States au- 



SO FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

thorities would authorize one to be built. It would also require 
the entire traffic of the Southern Railway to pass across the 
tracks of the Cincinnati, Hamilton & Dayton Railroad, at grade 
at Sixth street. This route would probably have suited a ma- 
jority of the people of Covington better than either of the others, 
as it was supposed it would afford them more convenient depot 
grounds, and it is the wish of the Trustees, if possible, to ac- 
commodate the wants of that growing city. While they have not 
been able to do so by the selection of the Willow Run crossing, 
they have had surveyed, and procured most of the necessary 
rights-of-way for a short branch, which they are advised, by 
their consulting engineer, will be equally good for its passenger 
business, and better for its manufacturing interests. 

The Newport bridge route has the great advantage of 
rendering unnecessary for the present the construction of 
another bridge over the Ohio river. The Trustees are aware of 
the objection of important and influential interests to the con- 
struction of bridges over navigable streams, and they have been 
fully impressed with the respect due to the opinions of the 
Board of Trade and Chamber of Commerce, recently expressed 
in 1?he reports of their Committees in regard to the crossing of 
the Southern Railway. They are, however, likewise satisfied 
that if the city is justified in embarking as she has in the con- 
struction of this great work it must be not only because of the 
convictions of her people that it is essential to her interests in 
order to reach the southern markets, but also that the road will 
place her on the principal highway between the north and the 
south, and lead to a largely increased railway traffic through her 
eorporate limits by bringing the entire system of southern roads 
on their own gauge within them. In the judgment of the 
Trustees this result will follow, and will necessitate in a com- 
paratively few years, another bridge at the west end of the 
city. Indeed some five years since, a charter, which has now 
expired, was obtained from Kentucky for that purpose by the 
roads coming in on the west. 

Nevertheless, had the Trustees been able before the thir- 
teenth inst., the day on which the time for the location of their 
road in Kentucky expires, to obtain satisfactory terms from the 
various companies having an interest in the Newport bridge 
and in the streets and approaches leading to it in Newport and 
in the connection track in Cincinnati so as to form a connection 
with the west end roads, a majority of them would have felt 
justified in bringing the Southern Railway across that bridge as 
it would have avoided the necessity of their constructing a new 
bridge and secured a desirable connection with both Covington 
and Newport. But after several months negotiation and 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY SI 

patient effort on their part, they were unable to obtain terms 
to which they thought they ought to accede. 

If the panic had not intervened and suspended negotiations 
for a time, it is probable that a satisfactory result might have 
been reached with all the companies interested, unless it was 
with the Louisville, Cincinnati & Lexington Short-Line Kailroad 
Company. Its demands were eventually of such a character as 
to preclude the possibility of entering into a contract with the 
others. In the contract between the bridge company and the 
Louisville Short-Line the former undertakes that it will not 
voluntarily agree to the use of the bridge by any other company 
without the consent of the latter. This consent could only be 
obtained on the following conditions : 

1. The City of Newport to guarantee a second right of way 
to the bridge through streets parallel to Saratoga street when- 
ever it shall have been ascertained that the business of the two 
roads can not be properly or satisfactorily operated upon two 
tracks in Saratoga street. 

2. The Trustees to pay to the Short-Line Company, all 
expenditures incurred in securing its present track and right 
of way in Saratoga street, and to execute an indemnity bond to 
hold the Short-Line Company harmless from any further litiga- 
tion arising from the use of two tracks in Saratoga street, as 
proposed by the Trustees. 

3. The Trustees to require and convey to the Short-Line 
Company sufficient grounds at either end of Saratoga street to 
compensate said company for existing and intended turnouts 
upon said street as will be specified by the General Superintend- 
ent of the Short-Line Company. Unless, therefore, the Trustees 
assented to these conditions, which the City Council of Newport 
denounced as extravagant and unreasonable, and paid the sums 
and provided Ifte grounds required by them at a large additional 
expense, which they did not feel authorized to incur, they would 
have been forced, if they had accepted a bridge grant, to take the 
risk of the result of the litigation to compel the Louisville Short- 
Line Company to allow the use of their bridge for their rail- 
way, and an adjustment of the approach and tracks in Saratoga 
street so as to adapt them to the business of the Southern Rail- 
way. The Trustees were unwilling to agree to the proposed con- 
ditions or to take this risk. 

In conclusion, if the choice they have made, should prove 
upon further consideration to be an error, the Trustees believe 
that it is one to correct, which, the requisite authority in Kem 
tucky can be obtained. By order of the Board, (Signed) M. 
Greenwood, President. 



82 POUNDING OF CINCINNATI SOUTHERN RAILWAY 

My belief was then, that it would cost us $2,500,000 to 
come into the city, through Newport, and it would not do for 
us to purchase the right of way over the bridge, and then have 
endless litigation as to a way to get to it. The Louisville Short 
Line, almost entirely monopolizes Saratoga street, in Newport, 
and without acting with them, and accepting their terms, we 
would have no way of getting upon the bridge; I do not want 
to go into a controversy about the bridge matter, but prefer to 
stand by the reasons given in the declaration that influenced us 
in coming across by way of Ludlow. 

Q. You say you waited until the expiration of the time 
which you had to finally locate the road through the State of 
Kentucky, by reason of the expiration of the option. If they 
compelled you to decide on the location of the road, could you 
not have received an extension from the Governor of the State? 

A. Xo ; he had no power to make an extension of that 
kind; he .could only extend the time of construction, and the 
people over there were impatient. 

Q. Did you or the Board ever seriously consider the pro- 
priety of expending the ten millions in construction of the line, 
from Xicholasville to Chattanooga ; and what objection, if there 
was any to this? 

A. I cannot speak for the Board, for I know of no official 
action, or consultation that would warrant me in saying any- 
thing in regard to the members of the Board; as for myself I 
never thought of such a thing. My trust duty was to provide a 
railway from Cincinnati to Chattanooga. I was governed in 
my action in the expenditure of money in endeavoring to bring 
that result about ; how that was to be accomplished, whether by 
the purchase of the Kentucky Central and the Sinton road, and 
the building of the remainder were with me practical questions 
to be determined as they arose. 

Q. In connection with that it is the desire of this Com- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 83 

mission to ascertain if the first appropriation of ten million 
would have completed it between Nicholasville and Chatta- 
nooga. Could not the road be finished between those points, 
with the first appropriation, for the purpose of opening and 
working the road for the time being? 

A. It would have been of doubtful legality to have done 
so. It would have forfeited valuable rights-of-way, and, pos- 
sibly, the entire rights of the city in the State of Kentucky, and 
certainly created a hostility against the road which it would not 
have been wise to raise. As an example — the county of Scott 
raised forty thousand dollars, to purchase the right-of-way 
through that county. One of the conditions of that subscription 
was, that work should be commenced on the line in the county 
by the middle of May, 1874. Therefore the Board picked out 
a single section — not having the means or wishing to immediately 
prosecute the work, section 67, being for some eight thousand 
dollars, and let the contract, and the people of that county 
provided us nearly the entire right-of-way through the county, 
some eighteen miles. 

Q. I want to get from you — in case whether the Legisla- 
ture had refused to grant another issue of bonds, to what prac- 
tical purpose would the money have been expended? 

A. The Trustees were bound to take it for granted that 
if this amount proved insufficient, that other means would be 
provided, and they were bound to keep in view the legislative 
action of the States of Kentucky and Tennessee. The grant 
to the Trustees was to build a road, not to expend a certain sum 
of money on a road; we were appointed, and acted upon the 
idea that it would be carried out in the execution of our trust. 
There was a time limited in the Act of Kentucky, in which this 
entire work was to be accomplished, subject to an extension, to 
be granted by the Governor. It would not, therefore, do for 
the Trustees to proceed upon any other idea than that the entire 



84 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

work should be built. It would have been, in my judgment, in 
violation of their trust duty, to have done so. I may say, how- 
ever, in the execution of the work, the plan of providing a road 
south of Nicholasville was followed, and the major portion of 
ten million was expended there. A reference to the contracts 
will show this to be the case, and that no contracts were let, 
north of Lexington, unless at points where there was very heavy 
work, except at a time when it was necessary to bring out what 
would be essential to the general result. Hence, when the line 
was opened, it was opened as a through line from Ludlow to 
Somerset, one hundred and fifty-eight miles. 

Q. After the permanent location of the line, and your 
better acquaintance with the requirements of the enterprise, 
what opinion did you form, if any. as to the probable cost of 
building the road? 

A. I may as well explain that in connection with what my 
view of building the road was. In the first place, as has already 
been stated, the ten millions were provided in the first act. In 
addition to the ten millions, it was provided that we might re- 
ceive donation of lands, moneys and other property, to be a part 
of the trust fund for the same purpose. In other words, it was 
not contemplated that the ten millions would be sufficient, but 
that other means would be necessary, and would be obtained. 
In the Tennessee Law there is a provision for subscriptions by 
towns and counties; but the counties are poor, and only one 
town, viz. : Chattanooga, was able to make any donation, which 
was one hundred thousand dollars for terminal facilities. The 
Kentucky Law had a similar provision for donations of the 
towns along the line in the first Bill, which was subsequently 
taken out ; we then looked for private subscriptions — f or instance 
if the road had been located by the way of Harrodsburg, which 
is the county seat of a rich county, it was supposed that the 
county, having no railway debt, would make large donations by 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 85 

voluntary subscriptions, or get a special Act authorizing it; but 
the road was not located through that county. I give that as 
an example. But the policy changed after the railway fever 
subsided, so that not as much was obtained as was expected. A 
long time elapsed in geting railway legislation, which prevented 
us from doing as well as was anticipated in the beginning. The 
influential citizens of Cincinnati, among whom was Mr. Groes- 
beck, and possibly other representative men, came to me and 
said that if the road was to go on, that it was better to let it in 
one entire contract, and for the Trustees not to enter upon the 
detail of construction, hence in drawing the "Wright Bill ; ' r 
and one of the objects of the "Wright Bill" was that the 
Trustees might make this contract for the entire line, so that the 
city's trust fund or capital would be supplemented by private 
capital, by making a contract to complete and lease the entire 
line, and the provisions for that will be found in the "Wright 
Bill" of 1873. Then the policy would have been: the city 
would have provided the entire right of way, and the depot 
grounds received by donations and otherwise and the balance of 
the money necessary to finish the road. A supplementary 
organization would furnish and complete the road — taking a 
contract to lease or build the road — the city ultimately owning 
the road at the termination of the lease. This plan would have 
probably been carried out. Indeed I have every reason to say 
that that plan on terms, substantially the same as those con- 
tained in the form adopted May 11, 1876, would have been suc- 
cessful, but the panic of 1873 wiped out the railroad capitalists 
of the United States. I know of instances of men who were 
worth from five to seven millions of dollars, who after that panic 
were worth nothing. Therefore that plan could not be carried 
out, and it became necessary, unless we abandoned the enterprise, 
that the Board should enter upon the work, because the time 
within which they were required to do it was fast approaching, 



86 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

viz. : February. 1874. They therefore picked out that portion 
of the work which they thought it would take the longest time 
to do, south of Xicholasville, viz : King 's Mountain tunnel, and 
on the thirteenth of December. 1873. let a contract for it. and 
from that time forth, steadily pursued the policy of providing 
a road south of Xicholasville — not making any contracts or do- 
ing anything towards the completion of a road north of Lexing- 
ton, until it was necessary to meet that which was South. After 
the Board had entered upon the policy of building the road — I 
do not know whether I am giving the policy of the board, or 
my own policy; I will say, however, what was done — after 
the Board entered upon the detail of building the road it be- 
came the policy to authorize one contract to complete and lease 
the road. Hence in the six million bill, as I wrote it, the second 
section authorized the Trustees to make a contract to complete 
and lease, the road after its partial construction and before its 
final completion. That was the form of the draft as presented 
to the Legislature in January, 1876; but instead of passing it 
in that form, the second section was so changed that it prohib- 
ited the making of a contract to lease the road until six months 
after it was completed. That was known as the "Dirr Amend- 
ment." I believe the cars would have been running into Chat- 
tanooga six (6) months ago if the policy of the original $6,000,- 
000 bill had not been reversed. The substance of the "Dirr 
Amendment" is that the Trustees are to have power to lease the 
whole line after its completion: but before doing so they were 
required to advertise six months. So, practically, we had no 
power to make a contract to complete and lease. That amend- 
ment was repealed April 24. 1877. when the original plan of 
the six million bill was restored (that gave the power to the 
Trustees) to make a contract for completing and leasing the 
whole line of railway after its partial construction and 
before its final completion. I nder that law it was necessary 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 87 

to advertise in newspapers in the cities of New York, Boston, 
Philadelphia and Baltimore for proposals for leasing. If the 
six million bill had been passed as drafted and introduced then 
the Trustees could have made a contract to complete and lease 
the whole line upon about the same terms as contained in the 
form of lease adopted May 11, 1878. The result would have 
been that the Trustees would not have laid any rails or owned 
any rolling stock, and would have saved a large amount of ex- 
penditure in that form. In other words, the lessees would have 
taken what you may call the sub-structure of a railway, viz. : 
The road-bed, and they would have put on what is called the 
permanent way. The Trustees would have provided the sub- 
structure, and the lessees put on the superstructure and put the 
road in operation. If this six million bill had passed as drawn, 
it is my judgment it would have completed the road and left 
a handsome surplus for terminal facilities. That was the idea 
of this six million bill ; but the policy was reversed. After 
adopting this policy, I did not give my mind to the question 
of cost. In other words I did not contemplate that the city would 
provide all the means. I always contemplated that the city's 
means would be supplemented by the means of others. So, 
therefore, when the six million bill was drawn, and as there was 
no authority in Ohio authorizing such companies, I drew what 
was known as the Common Carrier Act. 1 That act was in- 
troduced in January, 1876, but was not passed for fourteen 
months; therefore, under the Legislation of 1876, and the "Dirr 
Amendment," we could not make a contract to complete and 
lease the road, and likewise there was no authority for organizing 
home capital for that purpose. When the Act of April 24, 
1877, and the Common Carrier Act were passed, a public meet- 
ing was called at my suggestion, and out of that resulted the 
present Common Carrier Company. Then it was that this 
policy was to be carried out. This meeting was called on the 
i£ee Appendix C. 



88 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

eighteenth of April, 1878; the company was organized in May, 
I think, and was given what was intended to be a temporary 
license, in other words, the arrangement was temporary, the idea 
being that the company could enlarge its capital, and that either 
that it or some other company, would form a capital and take a 
permanent lease, under the form of the lease of May 11, 1878. 
As soon as the license was made to the Common Carrier Com- 
pany, I immediately set to work to draft a permanent lease. 
I had drafted the preamble and the first few sections, when the 
great railway strike occurred, that killed confidence in all rail- 
roads. The railway strike came in August, and I folded up my 
papers, until confidence began to be restored. On the fourth of 
December, I submitted the first draft of a contract to complete 
and lease the road; for these reasons and on account of this 
policy, I never set to work to seriously consider the cost of the 
road. I may say this that under the six million bill, as it was 
drawn, if it had been passed, and its policy carried out, the road 
could have been completed at less cost than it can by the Trustees 
— lessees could spread the work over more time — they could take 
a number of years, and do things, which if the Trustees do, had 
better be done at once. The lessees can afford to take risks that 
the city cannot; they can afford to take risks in trestles, which 
it would not do for the Trustees to take; for instance if there 
should be any inherent defect in the material of a trestle, or 
want of good material, or good workmanship, it might be held 
the city was liable. Hence the Trustees could not afford to 
build as light or cheap structures as a lessee of the road could. 
That was one other reason why I was anxious that it should pass 
out of the hands of the Trustees. 

Q. During March, 1873, the following report of surveys 
was made by Mr. Gunn; on the seventeenth of May, Mr. Lovett 
presented a written report, giving a comparison of percentage 
of cost of different routes, a report to which you have already al- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 89 

\ uded ; Mr. Gunn also made a verbal statement at the same time 
to the Board. On the thirtieth of August, Mr. Gunn presented 
written estimates of the cost of the route, making the military 
route that was adopted, twelve million of dollars, and the follow- 
ing resolutions were unanimously adopted: and 

Whereas, Thomas D. Lovett, Consulting Engineer, and W. 
A. Gunn, Chief Engineer in charge of surveys, have laid before 
the Board of Trustees a map, plan and profile, of said route, by 
the way of Nicholasville and Danville, to the State Line, in the 
direction of Sparta, Tennessee; and thence by the most direct 
and practicable route to Chattanooga; having due regard to 
grade, and cost of construction, which said map, plan and 
profile, exhibit the excavations and fills, bridges and grades, and 
all matters and things necessary to show the cost of construc- 
tion, together with an approximate of the cost of constructing 
the said railway, on said route from Cincinnati to the State 
Line ; thence in the direction of Sparta to Chattanooga ; also 
estimates showing separately the cost of construction, not only 
between the said line and the other lines named, surveyed and 
reported by the Engineers ; the last mentioned lines, are also 
based upon maps, plans and profiles, exhibiting the excavations, 
fills, bridges, grades, tunnels and all matters and things nec- 
essary to show the cost of constructing said other lines re- 
spectively; and 

Whereas, said maps, plans, profiles and estimates were also 
accompanied with a written and printed report explaining fully 
the same; and 

Whereas, the engineers have also laid before the Board a 
comparison of the costs of said routes, of their length, and 
grades, and an estimate of cost of said Railway ; and 

Whereas, the Board are now desirous of locating a part of 
said Railway in Kentucky. Therefore, 

Resolved, by the Board of Trustees that the Cincinnati 
Southern Railway between the points herein described, be and 
the same is hereby located as follows: Commencing at a point 
on the State Line where the said Railway is located in Tennessee 
intersects said south line in the southwest corner, Whitley county 
near Chitwoods, Scott county, Tennessee, thence northward 
through said Whitley county crossing the Cumberland river at 
Point Burnside, thence through Pulaski county, passing near 
Somerset, thence through Lincoln county about one mile from 
Waynesburg, two miles east of Hustonville, and thence into 
Boyle county, crossing the Knoxvil.e branch of the Louisville 



90 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

& Nashville Railroad, to a point about one mile west of the town 
of South Danville, and 

Resolved, that the Chief Engineers in charge of surveys be 
directed to prepare for filing in the County Clerk's office, of the 
aforesaid counties a copy of the survey locating as aforesaid, 
and submit the same for the inspection of this Board. 

Resolved, that the further location of the Railway be post- 
poned until the further order of this Board. Which preamble 
and resolutions were unanimously adopted. Now, the question 
is this, as to the twelve millions mentioned by Mr. Gunn in his 
estimate submitted to the Board on the thirtieth of August, 
1873, we find no figures mentioned? 

A. I suppose that there were no figures, the truth is that 
the rehearsal was to fulfill the provision put into the preamble of 
the Kentucky act. It was to fulfill this law, that was the ob- 
ject. My recollection is that no figures were submitted, except 
what Mr. Gunn submitted. 

Q. Do you remember whether at any time before that, a 
verbal or written communication was made to the Board by Mr. 
Lovett of any estimate of the cost, except the percentage cost ? 

A. Think nothing but the percentage cost, Mr. Lovett 
was simply a consulting Engineer. It is due to him to say that 
he did not hold himself responsible for the figures, so far as they 
were concerned. I know that he said they were exact enough 
to make the percentage comparison, but he did not commit him- 
self to the figures of Mr. Gunn ; no estimate was made in money. 
He had just at that time entered upon or consented to become 
Principal Engineer. About the time we determined to enter 
upon the work, then Mr. Lovett, who had been Consulting 
Engineer, became Principal Engineer, you will find that he was 
then called Consulting and Principal Engineer. No, he never 
made any figures that I know of, at that time ; we would have to 
spend thousands of dollars to have performed literally in an 
Engineer's view that preamble; but it was in the legal view 
that I considered it, and it was to conform to that act. 

Q. If the- prices which prevailed before the panic, and up 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY ill 

to the panic, had continued after you commenced the road, 
would not the cost of the road have been larger than it has turned 
out to be? 

A. I have no doubt that it would, although, for the 
reasons I have given as to the policy I wished pursued, I did not 
contemplate the cost. I had not expected to enter upon the de- 
tail, building the road, or of continuing to build it even after 
the Trustees had commenced. 

Q. Do you remember about the cost of the right-of-way — 
whether it was more or less than you expected? 

A. I think is was more than was expected, but the facts 
in regard to the right-of-way, as I recollect them, are as fol- 
lows: There have been donated, of rights-of-way, over two 
hundred miles. The Trustees have also received subscriptions for 
money, sufficient to reimburse them for the cost of twenty miles 
more, making the actual right-of-way, one hundred feet wide, 
donated over two hundred and twenty miles. About eighty 
miles have been acquired at the expense of the trust fund 
proper; of the balance, about thirty-six miles in Tennessee, it 
was estimated that one-third would be donated, and the re- 
mainder obtained at a moderate cost to the Trustees. The esti- 
mated cost, in Tennessee, is about fourteen thousand dollars, 
from Boyce's Station to Chattanooga. 

Adjourned until Friday, 9 o'clock A. M. 

FRIDAY MORNING, NOVEMBER 29, 1878. 9 O'CLOCK A. M. 

MET PURSUANT TO THE ADJOURNMENT. COMMISSIONERS PRESENT. 

E. A. Ferguson. Recalled to the stand. 

Q. Do you think the purchase of the right of way over the 
Covington & Lexington Turnpike Company prudent and neces- 
sary ? 

A. I thought it both prudent and necessary. 



02 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

Q. Do you think the purchase of what is called the "Sinton 
Road," was a judicious and economical measure? 

A. At the time I was negotiating with Mr. Sinton for the 
purchase of that road, I had in my hands a statement made up by- 
Mr. Lovett, which showed the value of the property to be about 
six hundred thousand dollars. 

Q. The value of the property to the Southern Railway'? 

A. Yes, sir. That is to say it would have cost to have 
acquired the land and done the work — putting the road there as it 
was — six hundred thousand dollars. We had the choice of going 
by that route or what was known as the Harrodsburg route. Mr. 
Sinton said subsequently that we had surveyed all around him 
and scared him out of his road. It is due also to Mr. Sinton to say 
that throughout the negotiation he said that he had no other in- 
terest in making the sale than to get rid of the property; as he 
intended to dispose of what he received for the benefit of Cin- 
cinnati. He subsequently gave his portion of the purchase 
money to the Cincinnati Bethel. When the negotiations with the 
Board first commenced the price asked was four hundred and fifty 
thousand dollars. The purchase was made at three hundred 
thousand in seven per cent, bonds, first issue. 

Q. Would you think it advisable, in finishing the road, to 
construct a line from Boyce's Station to Chattanooga, or to pro- 
vide an easement over the Atlantic & Western Road from Atlanta 
to Chattanooga? 

A. I do not suppose that the proper authority to provide 
an easement could be obtained if it were advisable. The road 
belongs to the State of Georgia, and it is in the hands of lessees 
who have unexpired term of about twenty years. I think the 
lease was originally twenty-five years, and it has run a few years. 
I doubt whether such an easement could be obtained; even if 
this could be done I should not deem it advisable. The Cincin- 
nati Southern Railway should have its own entrance into Chat- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 93 

tanooga. It is upon this condition that the people of Chattanooga 
have voted the one hundred thousand dollars of bonds. The cost 
of providing the right-of-way from Boyce's Station to Chatta- 
nooga is estimated at only fourteen thousand dollars, and the cost 
of building an independent line into Chattanooga would not ex- 
ceed one hundred thousand dollars. I do not think it would be so 
much as that. 

Q. Do you understand then, that unless the road is actually 
built by the Trustees from Boyce's Station into Chattanooga, 
that the city of Chattanooga is not bound to pay this one hundred 
thousand dollars? 

A. That is my understanding. 

Q. And the city ordinance provides for that? 

A. Yes, sir. 

Q. This appropriation of the city of Chattanooga of one 
hundred thousand dollars of bonds, is not for the completion, but 
for improvements for terminal facilities in the city of Chatta- 
nooga ? 

A. Yes, sir, and to the purchase of grounds also. There 
have been donated thirty acres of land in Chattanooga, and that 
city has also voted one hundred thousand dollars in bonds as a 
bonus to aid in the construction and for the purchase of lands, 
and to make improvements thereon within the city limits nec- 
essary to be used there, such as tracks, yards, etc. 

Q. Do you think the proposition made by Mr. Wilson, to 
divert the Southern Railway, towards Knoxville, was proper or 
feasible ? 

A. Neither proper nor feasible ; the Trustees had no power 
to do it, and even if they had, they ought not to have done it. Mr. 
Wilson found on coming to the City that the Trustees had no 
power to deal with him. 

Q. What is your idea about the railroad connections in 
Cincinnati, and the most suitable method of obtaining them? 



A. I suppose this answer calls for ray personal views about 
that subject. I have as yet come to no definite conclusion. I 
do about this matter, as I have about all others in conducting 
the trust, try to ascertain all the facts and hear all the argu- 
ments bearing upon the question, and then decide according to 
what I believe to be for the best interests of the road and City. 
As the road now terminates, its terminus is as it were upon a 
pivot ; where it can be turned in any direction. But one thing 1 
may say, as it has been and will be, undoubtedly, the policy of 
the Board — that is, we should by some means, probably by com- 
ing over the roads already built, to the business part of the 
City — accommodate the lower and business sections of the City 
and get as near their business as it is possible to do. This 
policy is expressed in a memorial submitted to the General 
Assembly, in March last, in a paragraph asking for further 
legislation and reads : 

"Justice to large commercial and manufacturing interests, 
located in the lower and eastern part of Cincinnati, likewise re- 
quires that terminal facilities, as near to their present business 
houses and factories as can be obtained without too great an ex- 
penditure, should be acquired. With this view the Trustees have 
been in conference with the representatives of railways having 
depots and tracks in that portion of the City, and hope and be- 
lieve that with the powers they now have, if they are empowered 
to take leases from the companies having the requisite grounds 
and rights-of-way, they can accomplish this object, and provide 
such other terminal grounds as will be absolutely necessary for 
operating the road, without the issue of the entire two millions 
of bonds as now contemplated. ' ' 

Q. Of course you are aware that the gauge of the Southern 
railroads differs from that of the Northern railroads and the 
Cincinnati Southern Kailway conforms its gauge to the Southern 
gauge. Do you think that more advantageous than to have con- 
formed to the Northern gauge? 

A. I do. The gauge of the Southern railroads is uniform 
at five feet. The Northern svstem is not uniform with four feet 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 95 

eight and a half inches. There was at the time, of the Northern 
companies, a six foot gauge, four feet eight and a half inches, 
and four feet nine inches. The Pennsylvania is four feet nine 
inches. And then there was the question as to whether we 
should carry the Northern system, with the capital of the city 
from Cincinnati down into the South or whether we should 
bring the entire Southern system into Cincinnati, I think the 
latter the true policy. 

Q. Do you consider it a material advantage as an at- 
traction to Southern traffic that our bridge imposes no tax upon 
the freight over the Southern Railway? 

A. I do. I estimate the value of the bridge franchise at a 
million of dollars. 

Q. The franchise, apart from its actual cost? 

A. Yes. Freights and passengers are charged for cross- 
ing on bridges that are owned by companies. The tolls charged 
upon freight in crossing the Ohio River is equivalent to the car- 
riage of freight from fifty to one hundred miles. 

Q. Do you not think it would have been more ad- 
vantageous to continue the road to the Cumberland River, so 
as to secure the trade of that river, than to have stopped it as 
Somerset, just a few miles this side? 

A. I do not. According to the plan of the road, and with 
reference to operating it, the following I understand to be the 
facts : the heaviest grade on the road is sixty feet to the mile ; 
that occurs between Ludlow and Greenwood Lake ; say on the 
first eight miles on this end of the road. At Greenwood Lake 
we have what are called ' ' make-up ' ' grounds, where there will be 
large yard room and track room in doubling up the freight trains 
as they come in and are sent away; because from that point to 
Lexington the grade is but twenty-four and six-tenths feet; at 
Lexington, the grade is fifty-two feet to the mile. This grade 
extends to Somerset, where the mountain grade of sixty feet 



96 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

commences. South of Somerset such large trains could not be 
hauled, and larger engines would have probably to be used, 
hence Somerset is made a station at which is our round-house. 
It is in other words a terminus of a division, and there we have 
a round-house or engine house, and turn-tables and other things 
necessary in operating the road. Now to have continued — if it 
were possible to have continued the road a few miles — would have 
necessitated the moving backward and forward over those few 
miles — or else necessitated making a round-house and turn- 
tables upon a part of the mountain division, making a new divi- 
sion. I do not think we would have been justified in the ex- 
pense for the Cumberland trade. Then to reach the coal trade, 
which was equally, if not more desirable than the Cumberland 
trade, the longest trestles on the road would have to be built. 
They were nine hundred feet long and one hundred feet high. 
They are not yet constructed, but they are now being constructed 
under the Huston Contract. As Somerset is but six miles from 
the Cumberland River, and a pretty good country road leads 
to it, the true policy, if we had had the money and had been 
permitted to expend it, would have been to have improved that 
common highway to the river if the trade would justify it for 
the time being. In any event there must be a haul of about three 
miles, unless new plans are made as has been spoken of by some 
parties in interest, viz. : An inclined plane, etc. ; but until such 
things are provided there must be a haul after the teams are 
loaded, whether you haul one, two or three miles does not make 
a great deal of difference in the cost of transportation, any com- 
pany operating our road could allow for this haul, just as they 
allow for the haul through the city and for transfers. 

Q. Can you give the reason why the line of road in this 
city was changed from Home street to McLean avenue? 

A. It was found that the Home street line would be too 
expensive, both in acquiring rights-of-way necessary to make 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 97 

it and in construction and making of fills. What is called the 
Home street line in this city did not follow the line of Home 
street, but deflected through private property. Hence private 
land interests were involved, for which there would probably 
have been heavy land damages. 

Q. Do you think it advisable on finishing our road to make 
such connections with southern railroads, as to give a preference 
to any one for business? 

A. I do not. It ought to be operated as an independent 
trunk line so far as that is practicable in railroading. Its true 
policy is to treat all connecting roads alike. 

Q. Is it your idea and your preference in case of a surplus 
remaining out of the two million appropriation, to complete the 
road from Boyce's Station to Chattanooga with such surplus? 

A. Certainly. If there be such surplus after providing 
the additional facilities on the line that it will be necessary to 
provide, and for the requisite connections in Cincinnati, and for 
the growing local traffic north of Somerset. What I would do 
at once is to supplement the Huston Contract, by a contract to 
complete and lease the road upon the terms contained in the form 
of lease adopted by the Board on the eleventh of May, 1878. 

Q. After having entered into a contract with Huston & 
Co., would not such a step involve litigation between Huston & 
Co., and the Trustees or the city? 

A. Not at all. I do not propose to supersede the Huston 
contract ; but I propose to supplement it. If you will turn to the 
minutes you will find my views are recorded in those minutes of 
the third of September. I think the best time for closing the 
trust which has heretofore existed, as an active trust has now 
come, and that there will never be a more favorable time to do so. 
I think the active duties of the Trustees should close, and that 
they should become as nearly as possible a passive Board ; seeing 
to the execution of the contract, and the lease which is there pro- 
7 



98 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



videcl for. This will of itself take some time; and the active 
duties of the Trustees will continue for some time to come, in 
seeing to the execution and providing means for the Huston 
Contract. The following is the preamble and the resolution to 
which I refer : 

Whereas, work to be done under the contract with R. G. 
Huston & Co., does not complete the Cincinnati Southern Rail- 
way to Chattanooga, its southern terminus, nor provide for the 
additional facilities essential to its growing and local traffic north 
of Somerset, and the proper management of the line when opened 
as a through line : 

Resolved, that proposals for building and leasing the whole 
line of said railway in accordance with the contract and lease 
adopted by this Board on the eleventh of May, 1878, be received 
at 12 o'clock, noon, the fourth day of November next. 

Ordered, that the form of advertisements be the same as that 
adopted May 11, 1878, with the necessary changes of dates, and 
that publication be made in the following named newspapers once 
a week for eight weeks, in accordance with the provisions of the 
act of April 24, 1877, authorizing a contract for the completion 
and leasing of said railway. Then follows the names of the news- 
papers. 

Q. The record shows that there have been some modifica- 
tions of the Huston Contract as to the time of completion ; when 
will the proposed penalty of one thousand dollars a day for non- 
completion begin? 

A. It will begin, so far as I know, on the twenty-sixth of 
August, 1879. We can not tell what will happen between this 
and that time. We have complied with our contract fully, up 
to this date. 

Q. Are there any contingencies on that point depending 
upon the decision of the Supreme Court as to the validity of the 
bonds ? 

A. There may be, but none have yet arisen. 

Q. Do you know why Mr. Lovett's salary was not fixed at 
the time of his appointment but deferred until his term of serv- 
ice of several years had nearly expired ? 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 99 

A. My recollection is that Mr. Lovett came into our service 
about October, 1872, as Consulting Engineer, I think he con- 
tinued as Consulting Engineer for about a year, when he be- 
came Consulting and Principal Engineer. When Mr. Lovett 
consented to act it was with some reluctance upon his part be- 
cause as he told me he had determined to retire from his pro- 
fession. As I understood, but not directly from him, he was in 
independent circumstances and it was not necessary that he 
should any longer pursue his profession — whether or not he 
would continue with us and how long, was not determined when 
he consented to act as consulting Engineer, hence in the resolu- 
tion appointing him, it was provided that his compensation 
should be fixed by the Board. When we determined to procure 
the services of some one as consulting Engineer, the matter, I 
think, was referred to Mr. Hooper to make inquiry, probably not 
by formal resolution, but I know the fact that it was placed in the 
hands of Mr. Hooper to make inquiry in regard to whose services 
could be obtained and their qualifications. Mr. Hooper I know 
spoke to me personally of Mr. Lovett. Whether he was spoken 
of in the Board I do not now recollect. From inquiries that Mr. 
Hooper had made and the reputation that he got of Mr. Lovett, 
it was supposed that he would be as good a person and the best 
Engineer that we could get. Mr. Hooper was to have seen Mr. 
Lovett, but Mr. Lovett was absent from the City, in Massa- 
chusetts. It was Mr. Hooper's intention to see him as soon as 
he returned, or to write to him, but my recollection is that Mr. 
Hooper was then preparing to go to Europe, or some business 
matters prevented him from doing so. I in some way got the 
address of Mr. Lovett and wrote to him, to know whether or not 
he would be willing to take the position. I received a letter from 
him in which he expresed a disinclination to take it ; but that he 
would see me on his return to the City. When he came home he 
called to see me, and I had a conversation with him in which I 

LOFC. 



100 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

went over the general subject, and gave him to understand that 
we did not know how far we would be successful in engaging in 
our enterprise ; but we thought that the time had come when we 
wanted some one who had had experience in constructing a road. 
He spoke of the fact of his not desiring to engage in his pro- 
fession, that he had retired, and that he did not wish to go into 
the active duties of his profession again. But I may say I per- 
suaded him to give us such information, from time to time, as we 
would want, that we would not expect him to give his whole time 
— and that it was not necessary then, as we had not entered upon 
the work of construction — that we should like to have his advice 
from time to time, and to that he consented. He got interested 
in the work. In the conversation with him I know that I spoke 
of it to him as being a work in which he could round up his pro- 
fessional career — the same as Mr. Latrobe, who was a friend of 
his, at Baltimore, and the Engineer of the Baltimore & Ohio 
Eoad ; as Edgar Thompson had in the Pennsylvania Road — that 
if it went on it would be a great work. The contract therefore 
between Mr. Lovett and the Trustees was that his compensation 
was to be fixed by the Board. He made no application for com- 
pensation until, I think, October, 1875; and received none, 
and his bills and expenses were very light according to my recol- 
lection. I believed then that Mr. Lovett had entered into this 
work with that view, and determined to end his professional career 
with the honor of having been the Principal and Consulting En- 
gineer of the Cincinnati Southern Railway. I accordingly gave 
him my confidence in that belief. When the application for com- 
pensation was made no action was taken, because I think that the 
Board at that time was not full. It was deferred from time to 
time, but for what reason I could not say, unless it was that Mr. 
Scarborough was about to leave the Board. It was one of those 
things to be taken up and acted upon in full Board, and for some 
reason that I cannot now say, unless it was that Mr. Scarborough 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 101 

was about to leave the Board, it was not acted upon. When 
Mr. Scarborough left for Europe we had not a full Board to 
pass upon it, and it was a matter which we believed should be 
passed upon by a full Board, and a matter that required con- 
sideration. When Judge Taft came into the Board, this subject 
was brought up, but Judge Taft was new to the duties, and de- 
sired time to acquaint himself with the duties of his position and 
the character of Mr. Lovett's service. Then we got into the 
excitement surrounding the six million bill, which continued un- 
til after the election in March, 1876. In the meantime Judge 
Taft had resigned, and Mr. Heidelbach resigned. Then Mr. 
Mack and Gen. Weitzel were appointed. Gen. Weitzel did not 
accept the position, and Mr. Schiff was appointed in his stead. 
These new members, of course, wished to have the same informa- 
tion and opportunity that Judge Taft desired, so that it was from 
time to time deferred, until it was fixed on the seventh of July, 
1876. 

Q. Do you know whether there existed in the Board, or 
with any members of it, any dissatisfaction with Mr. Lovett as 
Consulting and Principal Engineer ? 

A. There was dissatisfaction on Mr. Schiff's part and on 
my part in 1876. My confidence in Mr. Lovett was first shaken 
when his report in proof-sheets — I think in December or Janu- 
ary — was presented. He did not seem to me to possess any 
literary power — no power of presentation, or making a proper 
presentation of the work. It was not that kind of a statement of 
the work which I thought ought to have been made by a man who 
had had the opportunities that he had to know all about it. I also 
began to feel that the work was not coming out on time, as it 
ought to ; that there was a lack, not of engineering skill or knowl- 
edge, but of executive and administrative ability. The idea grew 
upon me that what Mr. Lovett needed was somebody to aid him 
in pushing the work. After the six million bill was passed, at 



102 FOUXDIXG OF CINCINNATI SOUTHERN RAILWAY 

the meeting of April 21, 1876, the Consulting Engineer presented 
his report in regard to the most speedy and expeditious method 
of laying track, recommending in that behalf the purchase of 
rolling stock, and the appointment of Charles E. Webster as 
Assistant Field Engineer, which I might say was a suggestion of 
my own to Mr. Lovett. While I believed Mr. Lovett the proper 
man for this place, yet I thought he should be supplemented in 
the field. Hence I offered the resolution, that will be found on 
the minutes of April 21. as follows : 

Resolved, that a Second Assistant Field Engineer be ap- 
pointed, whose duty it shall be to view and report on the progress 
of the work of construction along the entire line, and the manner 
in which the Division and Resident Engineers discharge their 
respective duties, and also to perform such other services as may 
be required of him by a resolution of the Board. 

Ordered, that the Second Field Engineer report monthly in 
writing to the Principal Engineer, and that he send a duplicate 
of his report to the Secretary to be laid before the Board. 

I wish to say I had not lost confidence in Mr. Lovett 's engin- 
eering abilities, nor in his integrity, but in his executive capacity ; 
and likewise I thought, probably, as we were about to enter upon 
the track laying and the work of construction with our own ma- 
chinery — we were about to lay the rails — that he was over- 
burdened. I think Mr. Lovett took umbrage at this resolution, 
and especially at that part which required this field lieutenant to 
report to the Board. At any rate Mr. Webster was. so to speak. 
pigeon-holed. He was kept, instead of in the field, in the office. 
I thought my duty as a Trustee required that I should pursue 
this policy of relieving Mr. Lovett from too many duties. I 
did not wish, hastily, to come to the conclusion that Mr. Lovett. 
who had been so long connected with the work, and had that ex- 
perience which no new party could have, should be given up or 
removed. Finding, as I say, that Mr. Webster was pigeon- 
holed. I determined to create and organize a construction depart- 
ment, separating the track-laying and operating from the En- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 103 

gmeer's department. Accordingly, on the eighteenth of July 
offered the following resolution : 

Resolved, that there be created an independent department 
to be known as the "Superintendent's Department," with an 
officer to be called the "Superintendent" of the railway, whose 
duty it shall be to have the care and supervision of the road and 
machinery belonging to the Trustees, and perform all such duties 
as are usually performed by the Master of the road and ma- 
chinery in a railroad company. Also to have charge of the force, 
material, engines, cars, machinery and supplies now engaged and 
used in track-laying. 

Ordered, that all requisitions for said department be made 
by said Superintendent, and that the Engineer's department 
turn over to said Superintendent, upon his appointment, the 
force, materials, machinery, and supplies now in charge of the 
Engineer 's department, including that belonging to the operating 
department, which is hereby abolished. 

Ordered, further, that said Superintendent report directly to 
the Board, and that the Engineer's department furnish to him 
such maps, plans, specifications and assistance as may be required 
for the prompt and efficient performance of his duties. 

Ordered, that Charles E. Webster, be and is hereby ap- 
pointed Superintendent of railway, during the pleasure of the 
Board, at his present salary, as second assistant Field Engineer, 
($2,500.00), which office is hereby abolished. 

Ordered, that the Rules and Regulations, heretofore adopted 
by the Board, for construction trains, be carried out by the 
Superintendent of railway, and that the permits, therein pro- 
vided for, be issued by him, instead of the Consulting Engineer. 

Which was unanimously adopted — there being present at the 
meeting, Messrs. Greenwood, Bishop, Ferguson and Schiff. 

I had found in Mr. Lovett, after this first movement, and 
after the organization of this track-laying department, a dis- 
position to have his own way. Indeed there grew up a division 
in the Board, in regard to Mr. Lovett, and Messrs. Greenwood, 
Bishop and Mack, supporting Mr. Lovett, and Mr. Schiff and my- 
self, not doing so. Mr. Lovett also took umbrage at organizing 
this department, and soon after tendered his resignation, I think 
that is the fact ; the minutes will show that soon after this meet- 
ing, he tendered his resignation. The gentlemen I have named— 



104 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

the majority — thinking it ought to be all nnder one head, Mr. 
Schiff and I, thinking we onght to have a separation. It is the 
same organization that takes place in every railroad company— 
that is the having of an operating department, as well as an 
Engineer's. When Mr. Lovett presented his resignation, 
it was without warning; it fixed no time in which we 
could find any one else; I had come to the conclusion, that our 
present Consulting and Principal Engineer, Mr. Bouscaren was 
the abler man of the two, and that we could dispense with Mr. 
Lovett 's services, without detriment to the trust. I may say, that 
Mr. Lovett came to me a day or so after he tendered his resigna- 
tion, and said to me, that he intended to persist in it ; that he had 
supposed that he always had had my confidence — I am afraid I 
am not saying what he said — but I know that he visited 
me — and if it was my desire, or if I thought he ought to 
resign, he intended to do so that he had had my confidence, and 
that if I thought he ought to sever his relations, he intended to 
persist in his resignation. But from some reason or other, he 
changed his determination, as his actions were to the contrary, 
and so much so that the present Engineer told me, when I applied 
for a paper, that he had orders from Mr. Lovett, not to give out 
papers to any one, without his sanction; I told Mr. Bouscaren, 
that as a Trustee, what I asked for must be given me. I should 
say, that what I asked for, were not original papers on file ; I 
would ask for a sketch of something that I wanted to aid me in 
my duties as Trustee ; something made up, that I could use, such 
for instance as the map I have here, showing the progress of the 
work which was made in October, 1875. As I have said, Mr. 
Lovett did come to me and say, that if I had lost my confidence 
in him, he did not want to continue in the service ; I gave him to 
understand, that I thought his usefulness was at an end. He 
did continue after that, however, I think until December; really 
a little longer than that. I probably ought to say, in justice to 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 105 

myself, that in 1876, I think it was 1876, that when Mr. Schiff 
came into the Board — Mr. Schiff was an excellent colleague — I 
discovered in Mr. Lovett, what I had not known in him before, 
a disposition to fight nature, or to act the English Engineer — 
that is to say, the English Engineer fights nature, forcing her 
to his own plans, while the American Engineer bows to nature, 
he avoids in place of forcing. 

Q. The Keagan tunnel for instance ? 

A. Yes, sir; and at the Kentucky River, where he tried to 
keep up a retaining wall, and here at Campbell's contract when 
he persisted in keeping the track in a direct line, when it ehou.d 
have been removed farther up into the hill, are instances of what 
I call the English plan. There was that element in him, which I 
had not discovered until about the time that Mr. Schiff came into 
the Board, and of course that changed my view of him as an 
Engineer. 

Adjourned until 2 o'clock, P. M. 

Afternoon Session. 
present the members of the commission. 

Mr. E. A. Ferguson, on the stand. 

Q. Can you tell us whether any accusation has ever been 
made against Mr. Lovett affecting his standing in any way? 

A. Soon after we commenced letting contracts, I think, a 
gentleman who was a large contractor and well known in the 
city, but not then on our line of work, came to me and said, that 
he had reason to believe that Mr. Lovett had shown favoritism in 
the letting of a contract, specifying that he had given work to 
a contractor for a work, which at the price named for one of the 
items would make a large difference, for there was likely to be a 
good deal of that kind of work, and there were other and lower 
bidders. It was a rule that I had had passed by the Board that 
all the bids should be preserved. I determined from the begin- 



106 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

ning that all papers that came into our possession should be pre- 
served. I immediately sent over here — the gentleman came to 
my office when it was on the opposite side of the street — and had 
all the bids brought to my office, including the bid which was the 
successful one — that is to say the one to which the contract had 
been awarded — I showed them to this man, who was able to 
judge, and he became satisfied that the accusation was untrue. 
That of course gave me additional confidence in Mr. Lovett's in- 
tentions in carrying out this work. That man subsequently be- 
came a contractor himself, and had considerable disagreement 
with Mr. Lovett and has now a large claim against the city; but 
I never heard him impugn Mr. Lovett's integrity. He came to 
me with this information out of friendly regard to me. That was 
the first accusation I heard against him. The second was in re- 
gard to the Moran & Kirwin contract. It appears that Messrs. 
Moran & Kirwin had been engaged in some way, with Mr. Lovett 
in building the Newport Waterworks, I think; I do not know 
that that work was let to them, but it was about the time the ac- 
cusation was made against him, that I heard he had been so en- 
gaged. Mr. Hooper had said to Mr. Wright our Treasurer, that 
a stonemason in his employment in the building of his new resi- 
dence on Walnut Hills, had related to him certain facts. This 
stonemason had been a subcontractor, and had been under Moran 
& Kirwin. He related to Mr. Hooper certain facts in regard to 
Moran & Kirwin, which covered an accusation that Mr. Lovett 
was a partner in their work on our road, and gave that as a reason 
for their not settling with him in any other way than they 
did — in the way that they did — for the reason that they could 
not do so without Mr. Lovett's consent. Mr. Wright said to 
Mr. Hooper that being an officer of the road, he was unwilling 
to receive this in confidence, that it was necessary for him to 
communicate it to me, and asked Mr. Hooper's consent and I was 
told of it. I went to the First National Bank and saw Mr. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 107 

Hooper, and he related to me the circumstances ; I said that it was 
a matter that should be immediately investigated. I accordingly 
immediately went and saw Mr. Lovett and related to him what 
I had been told. I said to him very frankly that it demanded 
for his own good an investigation, that he should come into the 
Board and make the demand, and if he did not I should. He 
came into the meeting of the Board. I stated to the Board 
what I had heard, and we appointed Colonel Merrill of the 
United States Service, and Mr. Gunn to make the investigation; 
they made us a report which is on file. I say that whatever 
might be my moral conclusions there was no legal conclusion 
that there was anything wrong about Mr. Lovett. In the mean- 
time the Moran & Kirwin contract had been completed, but not 
accepted, or at any rate the final estimate was not made up — it 
was kept in abeyance — I was determined that no payment 
should be made until I saw whether there was any legal grounds 
for not paying the final estimate. Here I will explain in regard 
to Mr. Lovett. We have to be very tender, in regard to him; 
he is absent from the country, he has no chance to cross-examine 
witnesses, which is due to him after so long a service to the 
road. By the terms of all contracts for construction, he is made 
the umpire between the contractors and the Trustees. He 
stands in this legal relation, and it is a very important thing to 
the Trustees. We agreed to pay what he certified was due, and 
the contractors agreed to take what he certified. Neither party, 
according to the decisions — according to the opinion of Judge 
Ballard, of the United States Circuit Court for Kentucky, in a 
very important case, which has gone to the Supreme Court, and 
the question is now pending in the Court of Appeals, of Ken- 
tucky, and you can see the importance of it — could impeach his 
(Lovett 's) decision, without showing fraud upon his part. You 
can see, therefore, why this investigation should be made as it 
was, and that we should not cast, without proper evidence, any 



108 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

imputation upon Mr. Lovett. It was not onr business, and it is 
not the interest of Cincinnati, to impeach their own Judge. If, 
however, the investigation had shown grounds for imputation 
of fraud on the part of Mr. Lovett, I should certainly have re- 
quired that the Moran & Kirwin estimate be not paid, but that 
they be put to litigate it, and that we should have an opportunity 
to show the facts ; but the law of the case made it important that 
what was done should be done in the manner that it was dene. 
Indeed, these gentlemen reported that there was no fraud. Ac- 
cording to my recollection, those are the only two that you may 
call accusations; but you can readily see that any one having 
the position of Mr. Lovett, was liable to be talked about, and to 
suspicion, and to have disappointed contractors call his judg- 
ment to account. I may say, however, that, so far as my recol- 
lection and knowledge extends, that the general complaint — so 
general that it may almost be called universal — was, that our 
Engineers were too strict — both in the requirements of the work, 
and too limited in the amount allowed for the execution of the 
work. I believe that it will be found that the men who made 
money, possibly with a few exceptions, made it — not out of the 
work — but out of the stores that they kept, to supply their work- 
men. 

Q. Did it ever come to your knowledge, or to the knowl- 
edge of the Board, so far as you know, that Mr. Lovett, in some 
instances, instructed the division Engineers to make more favor- 
able estimates? 

A. There was one occasion where I think that was done, to 
a certain extent, without the consent of the Board. I forget the 
name of the contractor, but the case was presented to the Board, 
and their action, taken upon it, will be found upon the minutes ; 
I think it was the case of Clark. I did not know of instances 
where he raised the classification — at least, I did not know of the 
instances when they happened — if there were such, but I have 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 100 

got the impression, since Mr. Lovett left our employ, that, in 
some instances, to save what would be a bankruptcy of the con- 
tractors and the stoppage of the work, he did raise the classifica- 
tion ; but I did not know it at the time, and this may not be cor- 
rect, as I say I have only heard of this — it is hearsay. But there 
are cases where, I believe, this was done, though I have no evi- 
dence of it. I have not got, with that impression, the evidence 
nor impression that it was done for the purpose of favoring a 
contractor — I mean favor him for illegitimate purposes. You 
know that some of this work was executed in the mountains, by 
men who ought to be good business men — men good enough to 
do the work, but not good enough men to keep store and carry 
on that business, and sometimes they, no doubt, took their work 
too low — or it was supposed they did — and it was essential that 
the work should go on. On the supposition that we were going 
on to complete the work, you can see where the work broke down, 
it would take a long time to organize and commence again. 
Once, as in the case of a mountain tunnel, we carried it on our- 
selves. It was only in exceptional cases, like the King's Moun- 
tain Tunnel, that we did it ; we, of course, reserved the power to 
do it, but it was only in such an exceptional case that we exer- 
cised the power. But I have the impression that Mr. Lovett, 
from good motives, and under a belief that less damage would 
be done to continue the work by favoring the contractors by 
raising the classification, did so. I do not absolutely know that 
it was done, but if it was done, it was done in that view. 

Q. When bids were brought in and opened on contracts, 
did you, or did the Board, so far as you know, analyze those bids 
in order to ascertain which was the lowest ? Did they rely upon 
the Engineer's recommendation? 

A. The method of doing business was this: There are 
different plans of executing works of this kind. This was done 
on what is known as the cash or English plan, which is de- 



110 FOUNDING OF CINCINNATI SOUTHERX RAILWAY 

scribed, in fewer words and better language than I can describe 
it. in a little book that I have here, and I shall therefore read it. 
It is called ''Railway Property."' by J. B. Jervis. who was one of 
the most eminent engineers of Xew York, and I think the En- 
gineer of the Erie Railway. In the fourth chapter, page 50, 
speaking of the methods of business, he says : 

"The method of business pursued in conducting the work 
of construction has been widely different at different times on 
different railways. The plan adopted in the commencement of 
railways was to have maps and profiles of the line and specifica- 
tions and the manner in which the work was to be done. As 
soon as these were prepared the work was advertised for con- 
cract and let to the lowest bidder, who was considered responsible 
for the undertaking. Propositions for the work received in this 
way were reduced to contracts, providing for the payment of 
the several items at certain rates. The Engineer was made the 
inspector and the umpire between the parties, from whose de- 
cision there was no appeal, in regard to anything pertaining to 
the contract, the manner of performing the work, measurement, 
and the estimates of quantities provided for in the contract, 
and the valuation of any extra work that unforeseen circum- 
stances might call for in the course of construction. The same 
mode of proceeding had generally been adopted in the construc- 
tion of canals. In this method the Engineer stood between the 
corporation and the contractor, and upon his capacity for his 
duties and fidelity to the parties the system very much depended. 
A want of confidence could not fail to produce dissatisfaction, 
and it is obvious that it could only be maintained by the ad- 
ministration of engineers of sound business experience and un- 
questioned fidelity of character. In the early history of rail* 
ways the line was divided into sections of one or two miles, and 
the contracts made for the grading of each section, and for light 
work several sections were sometimes let in one contract. ' ' This 
is what I call the cash plan, and Mr. Jervis goes on to consider 
the other plans, and upon page 58 says, ' ' There can be no doubt 
the old method of business is the best for parties who can furnish 
cash to build railways as an investment of funds. ' ' 

In addition to what is stated here, no extra work could be 
done without the written consent of the Board. Mr. Lovett was 
placed in the position of inspector and umpire, subject to re- 
moval at anv time bv the Board. Xow, vou can see that vour 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 111 

question relates to his department, and, being organized upon 
this basis, we would trust him so long as we had confidence in 
his ability and fidelity, keeping the watchfulness over him that 
prudent business men should. We could not, and would not, 
undertake under this system to look into the details; for it is 
hard to say, when we looked below Mr. Lovett, where the thing 
would stop. As a consequence, our first duty was to appoint a 
man in whom we had confidence, both as to ability and 
fidelity, and require him to make his department — not to 
dictate to him his subordinates — let him choose his own sub- 
ordinates, and hold him responsible for the conduct of his de- 
partment. I was going to say that you could see, if we went 
below Mr. Lovett, where we would stop ; for in this letting that 
has been spoken of there are fifty bidders, and if we could not 
trust Mr. Lovett we should have to go on down until we found 
who made the calculations. I have made a little calculation to 
show what it would lead to. There are thirty-five classifications 
in the contract. The number of bidders is fifty, and there 
would have to be seventeen hundred and fifty different calcula- 
tions made. Now, to this number named add the number of 
sections, twenty-five, we would have to have gone over forty- 
three thousand seven hundred and fifty calculations; or, if I 
had stopped, being satisfied with the calculations — there being 
fifty bidders and twenty-five miles — I would have to make twelve 
hundred and fifty over-lookings or combinations to see who were 
the lowest bidders. If, for instance, there were twenty-five 
miles and fifty bidders, whose bids were to be overlooked person- 
ally by each Trustee, and we did not necessarily depend upon the 
integrity of the Engineering Department, when would we get 
through ? 

Q. Then I understand your answer in substance to be that 
the Trustees did not undertake to make personal inspection? 

A. No, sir ; not in this way ; it would be impossible to do so. 



112 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

Let me say further that Mr. Lovett would return to us his recom- 
mendation, and sometimes he would group the sections, assign- 
ing lettings to thus and so. He would explain to us why he 
had done so. It must have been from a determination to prac- 
tice deception from the beginning, if there is anything wrong, be- 
cause he would explain to the Board that probably some man was 
lower on some of the sections, but the man had no means to prose- 
cute the work. Say it would be on a heavy section, and he might 
as a contractor, take a light section, but not a heavy section ; or it 
would not do to put him between others, or it might be that he 
was a contractor who had run away from his debts, or did not 
bring the proper recommendations as to his ability to do the 
work; or that the work would not go along as it should by hav- 
ing alternate sections let to two sets of contractors, and there 
would be difficulty. In one case there was an excellent con- 
tractor — I do not wish to mention his name — I mean a man in 
every way right but one — that is, he was a "spreer. " His 
ability was first-class, and he had done large amounts of work; 
but Mr. Lovett told us of his infirmity, and he was afraid to 
trust him with the particular work. But the man appealed so 
persistently — I do not know but his wife and friends came, say- 
ing that he was all right and would keep straight, that we 
finally gave him a contract. He was capable of doing the 
largest contracts, but we had to nurse him through; his old 
infirmity came upon him. In other words, we could not treat 
contractors as automatons, nor accept bidders because they were 
the lowest bidders. Sometimes other considerations would arise. 
The time in which the work must be done, requiring a strong 
party with a large force, for instance, we had work put off until 
we would need it ; or earth-work that would fall in must be re- 
moved immediately, or when time became the essence of the 
thing, and it was necessary to have the matter carried through 
speedily, it should not be let to small parties, but to strong par- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 113 

ties who were able to carry the thing through, and we considered 
that true economy. 

Q. We have before us a tabulation of forty bids upon one 
section — it is not necessary to name the section — of the forty 
bidders twenty bid lower than the successful bidder on the 
preliminary estimates that were furnished them to bid upon, 
and out of the twenty, sixteen of them would have done the work 
that was finally settled for at less price than the successful bid- 
der. If your attention had been called to that contract at that 
time, would it not have been a sufficient reason, and would it not 
have been your duty to bring it to Mr. Lovett's notice, and re- 
quire an explanation? 

A. Undoubtedly; and I should have done so at once. But 
I took it for granted that the man we had selected for our Chief 
Engineer was doing his duty, and the only case in which I 
thought he was not doing so I brought promptly to the atten- 
tion of the Board. I did not give as close attention to these 
matters as I should have done if I had not had other duties to 
perform. 

Q. You are familiar with these profiles and preliminary 
estimates? (Showing profiles.) 

A. Yes, sir; I was. 

Q. These are the profiles and estimates furnished to the 
bidders to bid upon? 

A. Yes, sir; I presume so. There was stretched on the 
walls in the office, at first the profiles and estimates, etc., but 
when we commenced making the lettings of a number of sec- 
tions, we hired a room in the Trust Company building, and had 
one of the employes stationed there where the bidders could see, 
and to make any explanations that were necessary. 

Q. Do you know that the contractors had any other quanti- 
ties or anything else to go upon in making these bids, but those 
profiles and the estimate marked upon them? 

8 



114 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

A. They had these, but it was a part of our specifications 
that they were not to rely upon them. That each contractor was 
expected to go and examine the work, it was made a special stipu- 
lation, "the quantities marked upon the profiles are approxi- 
mate, and will not govern the final estimate, contractors must 
satisfy themselves as to the nature of the soil, of the general 
forms of the surface of the ground, and the quantity of materials 
for forming embankments, or other work, and all matters which 
can in any way influence their contract, and no information 
upon any such matters derived from the maps, plans, profiles, 
drawings or specifications, or from the Engineer or his assistants, 
will in any way relieve the contractor from all risks or from 
fulfilling all the terms of this contract." I had that stipulation 
put in for legal as well as engineering reasons. I knew how 
these disputes had arisen, and it is one reason why we were able 
to carry on this work with so few litigations. I may say here 
that this cash plan was the principle upon which the English 
railways were built, also the Pennsylvania and the Baltimore & 
Ohio Koads. You must have a plan, and if it turns out that Mr. 
Lovett has practiced a deception upon us he has been astute in 
concealing it. 

Q. Did the Board itself have any means other than the 
preliminary estimates presented by the engineers of calculating 
the costs of the work? 

A. They had not. Of course they relied upon the en- 
gineers' department to furnish the preliminary and approximate 
estimates. I may say that I understand, in engineering, there 
is a difference between approximate and preliminary estimates. 
Approximate estimates are made by going along the line and 
sinking test-pits, undertaking to find out what is below, of 
course there could be no approximate estimates until those tests 
were made. When the resident and division engineers made 
reports, and their reports were brought to the office, and ap- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 115 

proximation could be made, as they were made in November, 
1875, then we had something like an approximate estimate; but 
before that we could not have what is properly called an ap- 
proximate estimate without test-pits and other means of arriv- 
ing at what is below the surface. It was supposed that Mr. 
Wirth must have sunk test-pits, because he appeared to be so 
successful and sure in his estimate of what was there ; they tell 
this story about him, — they say that he went to the section bid 
upon, or that portion upon which he bid, and he found on the 
farm near by, a well which was sunk to about the depth of the 
cut required on his work — the farmer on whose farm the well 
was, having sunk the well — Mr. Wirth inquired of him what 
the material was he had taken out of the well — which was his 
test-pit — being told, in that way he arrived at the conclusion 
that there was not much solid rock, and considerable loose rock, 
and he bid very low for earth-work and solid rock, and a very 
high price for loose rock, and thus got the contract. 

Q. The engineers did not take the precaution? 

A. Well, it appears that they did not drink out of that 
# ell ; I of course do not know how they got that, but it is a part 
of the current history. In other words he found a test-pit al- 
ready sunk, and he took advantage of it, 

Q. Are you aware that there exists a very wide difference 
in the preliminary estimates and the final — of as much as fifty 
per cent. ? 

A. I have heard a street rumor and seen some notices in 
the newspapers to that effect, but I know nothing about it, 

Q. Just look at that table (showing paper) ; we have 
worked those sections there, and have found where they run be- 
low and above. 

A. I was not aware of such a result ; of course I am not 
either called upon nor can give an explanation. It is for the 
Engineers' department to make such explanation as is required. 



1.16 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

I have given my view of what was a trust duty and how it was 
performed. 

Q. Are you aware that it was suggested to the Board, by 
one of its members (Mr. Scarborough), to appoint a competent 
person to supervise Mr. Lovett's calculations? 

A. I see, by the printed testimony of Mr. Scarborough, 
that when he found that Mr. Wirth, as a contractor, had shown 
a better knowledge of his business, and made a closer estimate 
of his contract than Mr. Lovett, that he thought it best for the 
Board to secure a Supervising Engineer, with whom to consult, 
in order that the approximate estimate might approximate the 
actual cost. The subject of Mr. Wirth's contract was subse- 
quently brought up in the Board by Mr. Scarborough; he said 
that he had investigated Wirth's contract; that he was satisfied 
that Mr. Wirth was shrewder than our Engineers; that there 
was no collusion, and nothing wrong about it, but that Mr. 
Wirth had shown superior knowledge. I have no recollection of 
Mr. Scarborough, after that, proposing, in the Board, to secure 
the services of a Supervising Engineer, nor do I believe the 
minutes will show any action looking to that end. Mr. 
Scarborough talked to me about having such an officer, and my 
reply was, that such an officer should be the Consulting and 
Principal Engineer, and that, if we were dissatisfied with Mr. 
Lovett, we should displace him — we should put another person 
in his place, and that Mr. Scarborough was not ready to do. A 
Supervising Engineer, I thought, would create trouble; we 
would have had a double-headed Engineering department, and 
Mr. Lovett occupying the position of umpire that he did, the 
true policy was if we were dissatisfied with Mr. Lovett, to put 
some one in his place; but that was not proposed by Mr. 
Scarborough — I mean, to displace Mr. Lovett. 

Q. Did you take an active part in the negotiation of bonds 
that were issued to build this road? 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 111 

A. I did. 

Q. Did you think it was better to ask for a bid on the 
whole issue of the bonds in a lump, by addressing circulars to a 
few prominent houses; than to invite bids by advertising for 
the whole or any part? 

A. I believe by our circulars we reached every one who 
would have seen an advertisement ; or more than would have seen 
the advertisement, without going to the expense of making pub- 
lication in the newspapers. I may say, that in doing what I did, 
in regard to the negotiations and sale of the bonds, I was largely 
controlled by the advice that I received from Mr. Scarborough, 
and other persons like him, of financial ability and repute. I 
believe what was done had the concurrence of Mr. Scarborough, 
and Mr. R. R. Springer. Indeed the sale of the first million of 
seven and three-tenth bonds, may be said to have been made 
through Mr. Scarborough's agency. 

Q. Through whom was the larger part of the bonds sold? 

A. The first million of seven and three-tenths bonds was 
sold through the agency of the American Exchange National 
Bank of New York City. After several negotiations, Mr. Hooper 
having determined to return to Europe, where his family was, 
I was directed to prepare a letter of authority to him to negotiate 
in London and the continent, the sale of $5,000,000 of gold 
bonds, giving him power for that purpose, to employ such 
agents and incur such necessary expenses as was usual in the 
course of such negotiations and sale. This letter will be found 
on page 591, of Minute Book 1. Mr. Hooper's authority was con- 
tinued until July 7, 1874, when he was directed to cease his 
negotiations abroad. From the tenor of his letters in January, 
1874, the Board became satisfied that Mr. Hooper would prob- 
ably fail to effect a sale of the gold bonds, which the Board had 
determined on at seven per cent., upon such terms as would 
be satisfactory, and determined to try the American market for 



118 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

currency bonds. I had had consultations in reference to the 
sales of seven and three-tenths currency bonds with Mr. W. AY. 
Scarborough, Mr. R. E. Springer and others. As Mr. 
Scarborough was to be in New York in March, 1874, I requested 
him to make inquiry there in regard to a sale of such bonds. 
On his return he wrote me the result of his inquiries. His let- 
ter was presented to the Board at the meeting of March 31, 
1874, and was referred to me with power to act, and to corre- 
spond with the American Exchange Xational Bank of Xew York, 
and notify its president that the bank had been appointed agent 
to sell at par and interest two millions of seven-thirty currency 
bonds. At the meeting, the third of April, I submitted a letter 
of the bank in reply to one of the first, asking for further in- 
structions and was directed to prepare a form of advertisement 
for proposals for bonds, and to continue correspondence. I 
thought it important that Mr. Scarborough should go to Xew 
York and aid in making sale of the bonds, and was, accordingly, 
at the meeting of the thirteenth of April, authorized to request 
Mr. Scarborough to do so, and give him such letter of instruc- 
tions as might be requisite. Mr. Scarborough went to Xew 
York for that purpose, first stipulating, however, that he would 
receive no compensation, and to him is largely due the successful 
sale of the first million of seven-thirty bonds. Mr. R. R. 
Springer, also, while in Xew York, used his influence for the 
same object. At the request of the Board, I went to Xew York 
in September, to arrange for inviting proposals for the second 
million of seven-thirties, which the American Xational Ex- 
change Bank were authorized to sell. Before going, some cor- 
respondence had taken place between the bank and myself, in 
regard to the sale of the balance of the ten millions : and I was 
authorized to negotiate in regard to such sale. While in Xew 
York I was also requested to obtain a loan of two hundred 
thousand dollars in anticipation of sales. I remained in Xew 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 11V 

York on this mission during September. The conclusion was 
certain propositions, which resulted in a temporary loan from 
the bank of two hundred thousand dollars, and an agreement for 
the disposal of the balance, eight million, three hundred thou- 
sand dollars of seven-thirty currency bonds. The agreement 
was made after consultation with Messrs. W. W. Scarborough 
and R. R. Springer, and was based upon a proposition prepared 
by Mr. Scarborough. (See Minute Book 2, pages 15 and 16.) 
These were the negotiations as to the sale of the seven and three- 
tenths bonds, and covered nine millions, three hundred and 
thirty thousand of the first ten millions. 

Q. Had you reason to believe by the examinations, that 
you made on the subject, that the commissions charged were 
reasonable? One-half of one per cent, to the American Ex- 
change Bank, and one per cent, to Kuhn, Loeb & Co. ? 

A. I so believed : and I had the advice of those gentlemen 
of whom I have spoken, to that effect. We knew from the sale 
of the first million about what it would cost — that is two per 
cent, to make the sale of those bonds — the cost of our putting 
upon the market the first two millions of bonds through the 
American Exchange National Bank was about two per cent. 

Q. Can you say whether commissions were ever paid to 
any other parties than the American Exchange National Bank 
and Kuhn, Loeb & Co.? 

A. None to my knowledge or recollection. 

Q. Do you think the option first given, and then the ex- 
tended option given to Kuhn, Loeb & Co., was necessary or 
judicious ? 

A. I believed so then. By an extension we got additional 
interest on the bonds, and I think that was beneficial. As our 
bonds were not sold they were drawing interest ; so that when we 
sold them we got the accrued interest. 

Q. Have you had occasion in your financial experience to 



120 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

study the value of options? Is it a very important item of 
value in regard to securities ? 

A. I cannot say that I have any other than the experience 
in this transaction. 

Q. It appears by the accounts that funds at one time were 
furnished to the city, to the amount of one hundred and fifty- 
six thousand nine hundred and fifty dollars, by the Trustees on 
June 26, 1875, to be applied to the payment of interest on bonds 
which had not been provided for by the city. Has any applica- 
tion ever been made to the city to repay or restore that amount? 

A. I do not recollect now the occasion of the advance. I 
really do not recollect it now, nor can I give an explanation of 
it now without some examination. It is one of those transac- 
tions which has passed out of my mind. My impression is that 
no payment has ever been asked because Mr. Scarborough 
claimed that up to a certain period the accrued interest realized 
upon the sale of bonds belonged properly to the city. It was 
interest we received, and therefore interest that we should pay 
out. 

Q. Is that included in what you carried over as your bal- 
ance on hand? 

A. No, sir, I think not. We paid it back into the city 
treasury, as we looked upon it as collected for the city. I can- 
not now say where the dividing line was, but I think it was 
about May when we entered into the contracts to the extent of 
the ten millions. Then it was the same as if the money had 
been realized because of the liabilities. In this connection I 
would like to say in regard to the protest of Mr. Scar- 
borough in May, 1875, against an increase of further liability on 
the part of the Trustees, and the opinion upon which it was 
based, of Messrs. Hoadley and Bates, that I did not concur in 
the legal conclusions of Messrs. Hoadley and Bates ; and if I had, 
I viewed my trust duty to be such in the state of the work then 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 121 

that we should go on, and if there was any risk, I was willing to 
put my personal fortune in peril rather than stop the work, and 
did so if their conclusion was right. 

Q. Is it your view that in any final lease of the road which 
may be made, that the taxes in Kentucky and Tennessee will be 
borne by the lessee? 

A. Yes, sir; and it is so provided for in the lease adopted 
on the eleventh of May, 1878. 

Q. As the Common Carrier Company, so called, has been 
served with notice of the termination of their license on the 
twelfth of March, next, has any plan been suggested or matured, 
to run the road after that? 

A. They have been served with notice under the license, 
which they now have, and there have been some negotiations 
with the Company looking to a renewal, but no definite con- 
clusions have yet been come to. No new plan has yet been de- 
vised by the Board. 

Q. Have you any opinion as to the propriety of the 
Trustees running the road themselves? 

A. That with me is the last alternative, so long as better 
mode can be provided. As I have already explained, what I 
desire to see is a contract made to complete and lease the road. 

Q. Would not that require the lessees to furnish a large 
sum of money? 

A. Not since the Huston contract has been made. A com- 
pany with a million and a quarter of dollars would have ample 
means to do its part. 

Q. Would not the dependent position of the city in a 
negotiation of that sort, and where the lessee would have so 
large a sum of money to use, lead to less favorable terms, than 
if it were not so? 

A. For such a road as the Cincinnati Southern Railroad, 
the sum in my judgment is comparatively small. I think there 



122 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

will be no difficulty in obtaining the amount, if that policy 
should be determined upon, even among our own people, sup- 
plemented by capitalists, who have an interest in the comple- 
tion of the road, and who would take an interest for the pur- 
pose of investment. The powers of the company organized 
under the Common Carrier Act, are ample for this purpose. 

Q. Has not the road developed an earning capacity under 
the Common Carrier Company beyond what was generally ex- 
pected on the part of the road already finished? 

A. It undoubtedly has, and has rather pushed the Com- 
pany than the Company pushed it. 

Q. Will not the road in your estimation be very largely 
beneficial to the whole State of Ohio outside the City of Cin- 
cinnati ? 

A. Unquestionably. So much so that they should deal 
with it with utmost liberality, and if a new Company is formed 
under the Common Carrier Act should become interested in its 
stock — I mean individuals interested outside the city — all the 
manufacturing towns of Ohio are largely benefited by the con- 
struction of this road. 

Q. If the people of the State, outside of the city should 
become sufficiently liberal in their feelings, owing to benefits de- 
rived by them from this enterprise, to bear a part of the burden, 
is there in your opinion anything in the constitution of the State 
to forbid it? 

A. I have not given consideration to the constitutional 
question involved in this interrogatory, but I have such faith 
in the outcome of the road, that I do not think we will ever 
require — if it is wisely managed — any aid other than that which 
will be furnished from the leasing of the road itself. 

Q. Are the suits now pending against the Trustees, in 
your estimation, in a favorable shape for the city? 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 123 

A. They are ; I have no fear of the results of any of the 
suits brought against the city by contractors. 

Q. Has it ever come to your knowledge, or have you ever 
been led to suspect that money was used for corrupt purposes 
in any of the legislation obtained in this matter of the Southern 
Railway ? 

A. It never has. I know of nothing that occurred of that 
complexion, in the case. The original act contemplated and 
provided for legitimate expenses such as were ordinarily neces- 
sary in procuring legislation to build this road, and no other 
expenses for this purpose have been paid to my knowledge. 

Q. Did you think it at the time of the contract with the 
Cleveland Rolling-mill, a judicious measure to purchase so large 
a quantity of rails, on the declining market, so long before they 
would be required for use? 

A. The question is predicated upon a mistake. There was 
no purchase of rails; but there was a contract for the manu- 
facture and delivery of rails, and it was made with a view to the 
rails being manufactured and delivered at about the time they 
would be required to be placed upon the road. They were made 
on our own specification, and they were different from other 
rails. It was calculated when the contract was entered into, and 
we were so advised by our Engineer, Mr. Lovett, that we would 
need that quantity of rails at the time that contract was made. 
It was one of those things in which as I have said, I became 
disappointed in Mr. Lovett. His work did not come out upon 
time. Hence we got the rails far in advance of the time we 
should have had them. It is one of the things which made me 
lose confidence in Mr. Lovett 's judgment. I was careful at the 
time the contract was made, to make inquiries of Mr. Lovett, 
and the contract was made with reference to the amount of 
rails that would be needed to carry the road to the Tennessee 
Valley, when they would commence to manufacture, and how 



fast they would manufacture and deliver, as we now know it 
was in advance of time. As to the decline in the market, if you 
will look at the number of bids, and if you will look at the opinion 
of the press of Cincinnati at that time, I think you will find 
that the universal judgment, was that we had made a very good 
contract. It was supposed that iron had touched bottom prices, 
indeed it was supposed that the Cleveland Company could not 
perform its contract. 




Given by the citizens of Cincinnati to the visiting merchants from the South, at the Music Hall, March 18, 1880, in commemoration of the com- 
pletion of The Cincinnati Southern Railway. 



VI. 

Grand Banquet. 

On March 18, 1880, upon the completion of the rail- 
way, the largest banquet ever spread in the United States, 
up to that date was given by the citizens of Cincinnati at the 
Music Hall in commemoration of that event. Not less than 
seventeen hundred and seventy-six Southern men, leading mer- 
chants, manufacturers, politicians, governors and other invited 
guests sat down to this magnificent feast. The balconies were 
occupied by the ladies and their escorts. To the toast, "The 
Cincinnati Southern Railway," Mr. Ferguson responded as fol- 
lows: 

' ' The idea of a railroad connecting Cincinnati with the South 
was more than a generation old when the plan upon which the Cin- 
cinnati Southern Railway has been built was devised. The city 
was illuminated in February, 1836, in honor of it, upon the pas- 
sage by the Kentucky Legislature of an act authorizing the con- 
struction of the Louisville, Cincinnati and Charleston Railroad. 
This illumination was one of the finest spectacles in her history, 
its beauty being enhanced by a fall of snow. To promote this 
road the first Railroad Convention known was held at Knoxville 
in July of the same year. Representatives from nine States 
were present, and among them were nearly all their prominent 
public men. It was presided over by the famous Governor 
Robert Y. Hayne of South Carolina, who became the President 
of the company chartered to construct it by the united action of 
that State and North Carolina, Tennessee and Kentucky. It is 
due to South Carolina to state that she was the first in the field, 

(125) 



126 FOVXDIXG OF CINCINNATI SOUTHERN RAILWAY 

and has done her part of the work. But the financial cat- 
astrophe in 1837 put an end to this scheme, and all subsequent 
efforts failed. 

"So a generation had passed and found Cincinnati without 
what had become her chronic want. Xo great work like it had 
been accomplished in this country without the aid of public 
capital but a union of public and private capital was forbidden 
by the Constitution of Ohio. The idea of taking in hand, as it 
were, the entire wealth of the city to do it, was novel. It did not 
meet with the approbation of the learned of the bar nor of the 
contented classes, the wealthy and the cultured. In the judg- 
ment, however, of plain common sense men, and of public 
spirited men like the honored and worthy President of the 
Board of Trustees, Miles Greenwood, if there were no legal 
obstacle to the city's doing the whole work, it should be done, as 
they believed it to be essential to her future growth and 
prosperity. Many of them had witnessed the marvelous growth 
of the city, until it had five times as many people within its 
limits as there were within the entire Northwest, within the mem- 
ory of the oldest of them. They knew this was because of the 
natural advantages of the city and the opening of internal com- 
munication by canals and turnpikes. 

"The broadhorn and the keelboat had been superseded by 
steamboats, but no longer were these freighted at the city's 
wharf with emigrants and their supplies destined for the West 
and the Northwest. Rich and powerful rivals had risen like 
exhalations and cut off her trade. The railway and telegraph 
had superseded the river and the mail coach. 

"Cincinnati was without a back country, and had ceased to 
grow. Facing her at the South was a vast empire, rich in 
natural resources, containing a population of 4,000,000, and 
penetrated by 4,000 miles of railroad converging at Chattanooga, 
where she could have no successful rival if the intervening 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 127 

rivers were bridged and the mountains pierced by the iron way. 
Peace prevailed, and commerce had resumed its sway. Along the 
war paths it was laying its iron ways — across the desert it was 
digging a channel for a water way, and severing continents to 
unite oceans, so that the voyage by sea, like the journey by land, 
should be measured, not by distance, but by time. 

" Plain people were aware of these things, and knew that an 
American city at a standstill was in the first stage of decline. 
Hence, in the history of popular voting, there has never been 
greater unanimity than upon the question whether or not the 
city should provide the Cincinnati Southern Railway; in a poll 
of nearly 17,000 votes there being but 1,500 in the negative. 

"The requisite authority having been obtained from Ken- 
tucky and Tennessee, the work of construction was ready to be- 
gin, when the panic of 1873 came, and it seemed as if once more 
the hope long deferred was to be blasted. Publicly the Trustees 
were advised to abandon the enterprise, and privately powerful 
influences were brought to bear upon the author of the plan to 
induce him to drop it. Indeed, it was only by the use of a lit- 
tle finesse that the first contract, that for King's Mountain tun- 
nel, was let in December, 1873. And then the Trustees had no 
funds, and did not own the site of the portals to the proposed 
tunnel. Thereupon four of them — Messrs. Greenwood, Heidel- 
bach, Bishop and Ferguson — borrowed on their own credit 
$5,000, bought the site and commenced the work. 

"You, our guests, have traveled its length of 336 miles, 
crossed its great bridges and passed through its twenty-seven tun- 
nels, have witnessed and can testify what has been done in the 
construction of the Cincinnati Southern Railway in the six 
years which have since elapsed. You have seen its graceful 
trestles, easy curves, nowhere a single reverse one, its low 
grades and substantial permanent way — this marvel of the en- 
gineer's skill in linking nature to civilization. The road has 



128 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

been well made, and it will stand. It is nearly fifteen centuries 
since the Roman legions withdrew from Britain, but in the 
England of to-day you can trace the Roman highways. This 
Union, which God grant may be perpetual, may dissolve, and its 
States become discordant, but through all mutations of govern- 
ment this more than Roman highway will exist to attest the 
greatness of the city that built it. 

"Although it has been built to serve the purposes of trade, it 
will have a higher and nobler use. As its trains pass back and 
forth like a shuttle in a weaver's loom, they will form a web 
of union between States heretofore separated by mountain 
barriers. Those who have been strangers will become neighbors, 
New ties, not of interest alone, but of affection, will be created, 
and sectional antipathy will give place to a feeling of love for 
a common country and the institutions founded by an illustrious 
ancestry. Guaranteed by these institutions in that due admix- 
ture of liberty and law which constitutes freedom, we may 
look forward with renewed confidence to the enlargement of the 
trade and manufactures of Cincinnati until she shall rival 
Florence in its palmiest days in the wealth and munificence of 
her citizens, the adornment of her parks and public places, the 
grandeur and beauty of her public and private structures, and 
as the home and patron of art, science and letters. Her strong 
men will be her merchant and manufacturing princes, and 
whether their messages are borne by the iron horse with his 
'heart of fire and breath of flame' or the chained lightning, the 
tidings will be peaceful and peaceful victories. Inspired by 
these thoughts, I believe I give voice to the sentiment of your 
hosts tonight when I say to you, their guests, 'You have come 
home.' " 



VII. 
Municipal Results. 

(Extract from Dr. J. H. Hollander's Dissertation.) 

"The industrial activity of Cincinnati, as of the ordinary 
American city, is twofold in character, conveniently described 
as 'productive' and 'distributive.' By 'productive' is 
meant manufacturing establishments largely engaged in the con- 
version of raw materials. 'Distributive' industries embrace 
so-called 'jobbing' interests, or those employed in the wholesale 
distribution of commodities of local and other manufacture. The 
two activities are nowhere sharply separated, and in many in- 
dustries are entirely merged. For the mere purpose of in- 
dicating the influence exerted upon each activity, the distinction 
however holds. 

"The immediate influence of the Railway upon the distrib- 
utive interests of Cincinnati was to open up a wide range of 
new territory, to provide prompter transportation and better 
shipping facilities, and to place freight rates upon a more 
equitable basis. Large sections of the South from which the city 
had before been cut off were practically thrown open by the 
traffic arrangements effected upon the completion of the Rail- 
way, as hereinafter described. In addition, a wide region, un- 
developed but rich in lumber and mineral wealth, was directly 
penetrated. Manufacturing towns and mining settlements 
sprang up along the line of the road, and Chattanooga under- 
went transition from a village to a city. The development of 
this section, forced for a while, but now proceeding along slower 

(129) 



130 FOUNDING OF CINCINNATI SOUTHERX RAILWAY 

and more normal lines, has influenced the commercial interests 
of Cincinnati in marked though indeterminate degree. 

" Immediately upon the opening of the Railway, though 
tariff rates were established to southern, southeastern and south- 
western points as far as Havana and Texas . a system of car ex- 
changes with railroads penetrating the territory bounded by 
the Mississippi, the Gulf of Mexico and the Atlantic was ar- 
ranged, and Cincinnati shipments placed without break of bulk 
or transfer in all southern markets. The absorption of the lessee 
company by one great trunk line, and later association with a 
second, have enlarged these opportunities, and as far as access 
to southern territory by means of railroad transportation is con- 
cerned, the present facilities of Cincinnati shippers are un- 
rivaled. ' ' 




THE CINCINNATI SOUTHERN. 



A correct County Map of the Lines of the Cincinnati Southern Railway and the territory 
through which it passes. 



APPENDIX A. 

Text of the Ferguson Act. 

An Act relating to Cities of the First Class having a Popu- 
lation EXCEEDING ONE HUNDRED AND FlFTY THOUSAND 

Inhabitants. (66 Ohio Laws, p. 80.) 

Section 1. Be it enacted by the General Assembly of 
the State of Ohio, That whenever, in any city of the first class 
having a population exceeding one hundred and fifty thousand 
inhabitants, the city council thereof shall, by a resolution passed 
by a majority of the members elected thereto, declare it to 
be essential to the interest of such city that a line of railway, to 
be named in said resolution, should be provided between termini 
designated therein, one of which shall be such city, it shall be 
lawful for a board of trustees, appointed as herein provided, 
and they are hereby authorized to borrow, as a fund for that 
purpose, not to exceed the sum of ten millions of dollars, and to 
issue bonds therefor in the name of said city, under the corpo- 
rate seal thereof, bearing interest at a rate not to exceed seven 
and three-tenths per centum per annum, payable at such times and 
places, and in such sums, as shall be deemed best by said board. 
Said bonds shall be signed by the president of said board, and 
attested by the city auditor, who shall keep a register of the 
same, and shall be secured by a mortgage on the line of railway 
and its net income, and by the pledge of the faith of the city, and 
a tax, which it shall be the duty of the council thereof annually 
to levy, sufficient, with said net income, to pay the interest and 
provide a sinking fund for the final redemption of said bonds; 
provided that no money shall be borrowed on bonds issued until 
after the question of providing the line of railway specified in 
the resolution shall be submitted to a vote of the qualified elec- 
tors of said city, at a specified election to be ordered by the city 
council thereof, of which not less than twenty days notice shall 
be given in the daily papers of the city; and further provided, 
that a majority of said electors, voting at such election, shall de- 
cide in favor of said line of railway. The returns of said elec- 
tion shall be made to the city clerk, and be by him laid before 
the city council, who shall declare the result by a resolution. 

(131) 



132 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

The bonds issued under the authority of this section shall not 
be sold or disposed of for less than their par value. 

Section 2. If a majority of the votes cast at said elec- 
tion shall be in favor of providing the line of railway as specified 
in the first section, it shall be the duty of the solicitor forthwith 
to file a petition in the superior court of said city, or, if there 
be no superior court, then in the court of common pleas of the 
county in which said city is situate, praying that the judges 
thereof will appoint five trustees, to be called the trustees of 

railway (the blank to be filled with the name given to the 

railway in the resolution) ; and it shall be the duty of said judges 
to make the appointment, and to enter the same on the minutes 
of the court. They shall enter into bond to the city in such 
sum as the court may direct, with one or more sufficient sureties, 
to be appointed (approved) by the court, conditioned for the 
faithful discharge of their duties. The bond so taken shall be 
deposited with the treasurer of the corporation for safekeeping. 

Section 3. The said trustees and their successors shall 
be the trustees of the said fund, and shall have the control and 
disbursement of the same. They shall expend said fund in pro- 
curing the right to construct, and in constructing a single or 
double track railway, with all the usual appendages, includ- 
ing a line of telegraph between the termini specified in the said 
resolution ; and for the purposes aforesaid shall have power and 
capacity to make contracts, appoint, employ and pay officers and 
agents, and to acquire, hold and possess all the necessary real 
and personal property and franchises, either in this state or in 
any other state into which said line of railway may extend. 
They shall also have power to receive donations of land, money, 
bonds and other personal property, and to dispose of the same in 
aid of said fund. 

Section 4. The said trustees shall form a board, and 
shall choose one of their number president, who shall also be 
the acting trustee, with such power as the board may by reso- 
lution from time to time confer upon him. A majority of said 
trustees shall constitute a quorum, and shall hold regular meet- 
ings for the transaction of business, at their office in the city 
under whose action they are appointed, but they may adjourn 
from time to time to meet at any time and place they may think 
proper. They shall keep a record of their proceedings, and 
they shall cause to be kept a full and accurate account of their 
receipts and disbursements, and make a report of the same to 
the city auditor annually, and whenever requested by a resolu- 
tion of the city council. No money shall be drawn from said 
fund but upon the order of said board, except their own com- 
pensation, which shall be paid out of the same upon the allow- 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 133 

ance of the court appointing them, and shall be proportioned* 
according to their respective services. 

Section 5. Said trustees shall have power to take such 
security from any officer, agent or contractor, chosen, appointed 
or employed by them, as they shall deem advisable. They shall 
not become surety for any such officer, agent or contractor, or 
be interested directly or indirectly in any contract concern- 
ing said railway. They shall be responsible only for their own 
acts. 

Section 6. Whenever the city solicitor of any city under 
whose action a board of trustees has been appointed as herein 
provided, shall have reason to believe that any one of said 
trustees has failed in the faithful performance of his trust, 
it shall be his duty to apply to the court that appointed 
said trustee, by petition, praying that such trustee be removed, 
and another appointed in his place ; and when a vacancy shall 
occur in said board from any other cause, it shall be filled in like 
manner. If the said city solicitor shall fail to make applica- 
tion in either of the foregoing cases, after request of any holder 
of the bonds issued by said trustees or by a taxpayer of the corpo- 
ration, such bondholder or taxpayer may file a petition in his 
own name on behalf of the holders of such bonds for like relief, 
in any court having jurisdiction, and if the court hearing the 
action shall adjudge in favor of the plaintiff, he shall be al- 
lowed as part of his costs, a reasonable compensation to his 
attorney. 

Section 7. "Whenever in the construction of a line of 
railway as herein provided, it shall be necessary to appropriate 
land for the foundation of the abutments or piers of any 
bridge across any stream within or bordering upon this state, 
or for any other purpose, or to appropriate any rights or 
franchises, proceedings shall be commenced and conducted in 
accordance with the act entitled "An act to provide for com- 
pensation to the owners of private property appropriated to the 
use of corporations," passed April 3, 1852, and the acts supple- 
mentary thereto, except that the oath and verdict of the jury 
and the judgment of the court shall be so varied as to suit the 
case. 

Section 8. Whenever there shall be between the ter- 
mini designated in any resolution passed under this act, by a 
railroad already partially constructed, or rights of way ac- 
quired therefor, which can be adopted as part of the line pro- 
vided for in said resolution, the trustees of said line may pur- 
chase the said railroad and right of way and pay for the same 
out of the trust fund. 

Section 9. The said trustees shall have power, as fast as por- 



134 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

tions of the line for which they are trustees are completed, to 
rent or lease the right to use and operate such portions upon 
such terms as they may deem best; but such rights shall cease 
and determine on the final completion of the whole line, when 
the right to use and operate the same shall be leased by them to 
such person or company, as will conform to the terms and con- 
ditions which shall be fixed and provided by the council of the 
city by which the line of railroad is owned. 

Section 10. The city council of any city passing a resolu- 
tion as provided in the first section, may appropriate and pay 
to the said trustees, out of the general fund of said city, such 
sum as may be necessary for defraying the expenses of the 
election, and said sum shall be repaid out of said trust fund 
when raised. 

Section 11. This act shall take effect on its passage. 



APPENDIX B. 

Opinion of the Superior Court of Cincinnati. 

In General Term, January 4, 1871. 

J. Bryant AA 7 alker, Solicitor of the City of Cincinnati, and a 
Taxpayer of Said City, 

Plaintiff, 
versus 

The City of Cincinnati, Chas. H. Titus, Auditor, and William 
Hooper, Miles Greenwood, Richard M. Bishop, Philip Heidel- 
bach and E. A. Ferguson, Trustees of the Southern Rail- 
way, 

Defendants. 

Taft, J. This suit is brought for an injunction against 
the city and the Trustees of the Cincinnati Southern Railway. 
The petition recites the act of the Legislature, passed May 4, 
1869, to authorize the appointment of trustees and the con- 
struction of the road, and the issuing of bonds of the city to the 
amount of ten million dollars for that purpose ; alleges the ap- 
pointment of the trustees under the act, and recites the pro- 
ceedings of this Court, as recorded, in relation to said appoint- 
ment, stating that the Trustees have organized and obtained an 
office ; that they have procured the consent of the Legislature of 
Tennessee to build the road through that State, and applied to 
the Legislature of Kentucky for a like consent; that the Ohio 
Legislature have passed another act, of March 25, 1870, supple- 
mentary to that of May 4, 1869, authorizing the city to advance 
fifty thousand dollars to the Trustees for the purpose of carry- 
ing into effect the object of their appointment, to be repaid out 
of the bonds to be issued under the original act ; that the Audi- 
tor has appropriated a portion of said fund, and there remains 
a part unappropriated; that the acts above mentioned are un- 
constitutional and void, and the advance of this money a mis- 
application of the public funds and not a proper corporate use, 
and asking an injunction. 

The defendants have demurred. 

(135) 



136 FOUXDIXG OF CINCINNATI SOUTHERN RAILWAY 

AVe have thus presented for our consideration the consti- 
tutionality of those acts by which the city of Cincinnati has 
been authorized to construct the Southern Kailroad, and to ex- 
pend money preliminary to its construction by surveys and 
other preparations for the work. 

That the Legislature regarded the road as a matter of 
public concern to the city, and a proper work to be carried 
through by taxation on city property, is shown by the enact- 
ment of the law authorizing the issue of the bonds to build it, 
and the levy of the tax to pay the interest thereon ; and that the 
people of Cincinnati entertain a like opinion is also evinced 
by the popular vote, as well as by the proceedings of the legis- 
lative body of the city. 

The importance of this project, as a Cincinnati project, and 
its public character as a subject of taxation, are questions, there- 
fore, which have already been decided by those most deeply con- 
cerned, and by those who have been especially and primarily 
intrusted with their decision; and it would require a clear case 
against the opinions of the city and State Legislatures, thus 
unequivocally expressed, to justify the Court in contradicting 
them in its finding on this point. 

It has been held by our Supreme Court that the construc- 
tion of a railroad might be a proper subject for the taxation of 
a municipal corporation, independent of, and prior to, the re- 
striction in our present constitution, and the issue of bonds and 
the levy of taxes to pay the interest on them, was enforced by a 
writ of mandamus since the constitution of 1851 was adopted, 
the act under which the subscription was made having been 
passed prior to the change in the constitution. If the con- 
struction of a railroad had been a purpose beyond the scope of 
municipal taxation, the restriction in the new constitution upon 
the power of a city to lend its credit or otherwise assist a private 
corporation in its construction, would not have been required. 

The form in which such aid was granted, usually, was 
by lending bonds or money to the corporation which was con- 
structing it. or by subscribing to its capital stock. The rail- 
road company was a private corporation, and operated its road 
for its own profit, but the public derived large incidental ad- 
vantages from its use. In this State, it has been several times 
decided, that a municipal corporation had an interest in such a 
work to justify a municipal tax to aid in carrving it through. 
(2 O. S., 607, 647, 649; 14 0. S., 472, 479.) 

If, then, the restriction in the present constitution against 
the aiding or subscribing to the stock of railroad companies by 
towns, cities, and counties had been omitted the Legislature might 
have authorized such aid to railroad corporations. (Cass vs. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 137 

Dillon, 2 0. S., 608; Cincinnati, Wilmington & Zanesville Rail- 
road Company vs. Commissioners of Clinton County, 1 0. S., 
77; Fosdich vs. Village of Perrysburg, 14 0. S., 473.) 

It evidently follows, from these repeated adjudications, 
that, if the- Legislature, under the old Constitution, instead of 
authorizing municipal corporations to aid private corporations 
in constructing railroads, by the issue of bonds, or subscription 
to the capital stock of such companies, had authorized a city 
itself to construct a railroad deemed of public importance to 
such city, and indispensable to its welfare, it would have been 
constitutional. The same reason would have justified both 
methods of securing the same object. 

It would have been at least as constitutional to have au- 
thorized the city to build the road, as to have authorized it to 
loan money to a private corporation, in order that it might build 
it. By the latter plan, the accomplishment of a public purpose 
through the application of the public funds, was left depend- 
ent upon the good faith and discretion of a private corporation, 
whose legitimate object was profit to its individual stockholders. 
This has long been regarded as objectionable. 

The restriction in the present constitution which is sup- 
posed to prohibit the act authorizing the city of Cincinnati to 
build its Southern Kailroad, is contained in the sixth section of 
the eighth article, which provides "that the General Assembly 
shall never authorize any county, city, town, or township, by a 
vote of the citizens or otherwise, to become a stockholder in any 
joint stock company, corporation, or association whatever, or to 
raise money for, or to loan its credit to, or in aid of any such com- 
pany, corporation, or association." 

This restriction plainly cuts off the power to authorize 
cities to loan their credit to railroad companies or take stock 
in them. The power to authorize the city itself to construct 
such an improvement, however, is not mentioned. 

By the fourth section of the same article, it is provided, 
that "the credit of the State shall not, in any manner, be given 
or loaned to, or in aid of, any individual, association, or cor- 
poration whatever, nor shall the State ever hereafter become a 
joint owner or stockholder in any company or association in 
this State or elsewhere, formed for any purpose whatever." 

Prior to the adoption of the constitution, "it was compe- 
tent for the Legislature, under the constitution of 1802, to 
construct works of improvement on behalf of the State," as did 
the Ohio canal, "or to aid in their construction, by subscribing 
to the capital stock of a corporation for that purpose," as it 
did in the case of the Cincinnati and Whitewater Canal Com- 
pany, "and to levy taxes to raise the means, or by an exercise 



138 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

of the same power to authorize a county or township to subscribe 
to a work of that character running through or into such county 
or township, and to levy a tax to pay the subscription," as was 
held in the case of C. W. c(; Z. R. R. Company vs. Clinton 
County, 1 0. S., 77, and S. & I. R. R. Company vs. North Town- 
ship, 1. 0. S, 105 ; also several other cases, as 1 0. S., 153 ; 2 0. S., 
608; 7 0. S., 327; 8 0. S., 394; 14 0. S., 472, 479, and still in 
other cases, which need not be cited, but which leave no doubt 
on this question, in the State of Ohio. 

Nothing can be clearer than that this restriction upon the 
State is limited to its loaning its credit to companies or corpora- 
tions, and to its "becoming a stockholder in any company." It 
can not be contended that the provision intended to prohibit 
the State itself from accomplishing directly, "any purpose 
whatever." The extent of the restriction is that the State shall 
neither lend its funds to, nor become a member of, a private 
corporation for any purpose whatever. Its power to make neces- 
sary public improvements without the agency of corporations 
remains as it was before; and what it was before, we have seen, 
was not doubtful. 

We feel bound to give a like construction to the sixth sec- 
tion, which applies to cities. 

They can not be authorized now, as formerly, to lend their 
funds or their credit to, or to become members of trading cor- 
porations, for any purpose whatever. But they can be author- 
ized to expend their own funds in making necessary public im- 
provements, in the same manner and to the same extent as be- 
fore the adoption of our present constitution. 

In our opinion it follows logically, and unavoidably, from 
the decisions of our own State, and indeed from the current of 
authorities in other States, that these acts are constitutional. 
Upon a careful examination of our present constitution and a 
comparison of it with the constitution of 1802, and the adjudi- 
cations of our courts under it, the case appears to our minds 
clear of doubt. 

If, however, the case were doubtful, we should not be justified 
in pronouncing the acts of the Legislature void. The pre- 
sumption must always be in favor of the validity of the laws 
enacted by the State Legislature, if the contrary is not clearly 
demonstrated. 

The incompatibility must be clear, to warrant the setting 
aside of an act of the Legislature duly passed. C. W. & Z. R. R. 
vs. Commissioners of Clinton County, 1 O. S., 823; Lehman vs. 
McBride, 15 0. S., 591; 10 O., 235; 11 0. S., 641. 

In Lehman vs. McBride, our Supreme Court declared "that 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 139 

while it was the right and the duty of judicial tribunals to give 
full force and effect to the organic law of the State, and, there- 
fore, to declare null and void any attempted acts of legislation 
which contravene the limitations imposed by the constitution 
upon Legislative power, yet such judicial interference can not 
be justified in doubtful cases." 

Such is the uniform current of judicial authority. Mr. 
Cooley, in his work on Constitutional Limitations, lays down 
the same rule, pages 87 and 88. 

It was said in the case of Sharpless vs. Philadelphia, 21 
Penn. St., 164, which arose from an attempt to resist a tax 
levied to pay a railroad subscription, that an act resting in the 
discretion of the Legislature will be pronounced void, "only 
when it violates the constitution, palpably, plainly and in such 
a manner as to leave no doubt or hesitation in our minds. ' ' 

And in Cheney vs. Hooser, 9 B. Monroe, 345, the Court de- 
clared that a "tax must be considered valid, unless it be for a 
purpose in which the community taxed has palpably no in- 
terest. ' ' 

We are at liberty to use our judgment as to what is judi- 
cious for the State to enact, or for the people of the city to vote. 
Can we assume judicially that the people of this city have no 
interest in the Southern Railroad, contrary to the solemn act 
of the Legislature, whose duty it was to pass on this very ques- 
tion, and contrary to the vote of the people? Is this a case in 
which we can hold that the State Legislature has clearly gone 
beyond its authority? We think not. 

The objection has been suggested that the Southern Rail- 
road is to extend a great distance from Cincinnati, and beyond 
the limits of the State of Ohio. The objection is plausible. But 
power has often been granted to cities to operate beyond their 
corporate limits in order to secure something essential to their 
welfare. The city of New York was authorized to bring the 
water of the Croton river, a distance of forty miles, at a cost 
of $11,000,000; nor can we suppose that the exercise of such 
authority for such a purpose would have been prevented, if the 
Croton aqueduct had crossed the line of a State. 

Cincinnati has, in several instances, exercised authority 
granted by the Legislature to make costly improvements beyond 
the corporate limits. The House of Refuge was built under 
such a law. The Infirmary was beyond its limits, also the 
Work-house. 

The city was authorized to expend funds in the purchase 
of stone coal in the mines which are not located within the 
corporation, but in different States, "and in all the necessary 
agencies for the procuring, transporting, delivery of said coal," 



140 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

to the city, for the purpose of protecting the cities against ex- 
orbitant prices in the time of scarcity. 

Cincinnati, under a law of the Legislature, loaned to the 
Ohio & Mississippi Railroad Company, whose improvement lay 
principally beyond and outside of the State of Ohio, a large 
sum of money, and afterwards exchanged its bonds for the 
stock of the company. 

Under a like law of the Legislature, the city of Cincinnati 
has already invested $150,000 in the railroad from Cincinnati 
to Lexington, in the same general direction as that contemplated 
for the Southern Railroad, and altogether outside the State of 
Ohio. 

If there were a lake of good water on the south side of the 
Ohio river, and if the Legislature and the city itself were of the 
opinion tliat the welfare of the city required that an aqueduct 
should be constructed by the city to draw pure and wholesome 
water from that source, and the proper legislation were had in 
Ohio and Kentucky, it can not be doubted that the city could 
raise the money by taxes under the authority of such legislation, 
to do the work. 

The fact that it is expected that the Southern Railroad 
will* extend beyond the State line a much longer distance, or 
that it is not water which is to be drawn by it to Cincinnati, 
does not change the principle. We do not say that this prin- 
ciple could not be so abused as to require the interposition of the 
judiciary to restrain it. But we have no evidence on which 
we can so find in the present case. 

The opinion of Judge Cooley in the case of the People vs. 
Salem, in the Supreme Court of Michigan, is not inconsistent 
with the decision we now make. That opinion decided that the 
levy of a tax to raise money to give to a railroad company either 
by loan, or by subscription, to the capital stock, to help con- 
struct its road, is not a proper use for the taxing power, because 
it is giving the public fund to a private corporation. 9 Am. 
Law. Reg., 487. 

It has no application to a case where the municipal corpo- 
ration itself constructs a public work essential to its own wel- 
fare, as the learned Judge has himself declared in an opinion 
published since that decision, in which he says "that the power 
of cities in Ohio to construct works of internal improvement, 
with Legislative permission, has been settled by judicial de- 
cision," and "that there is nothing in the present constitution 
of Ohio designed to prevent the local authorities from levying 
taxes for the construction of railroads where their own agencies 
are employed for the work." 

Indeed, the opinion coincides entirely with that which we 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 11,1 

have expressed. Nor is the case of Whiting vs. The Sheboygan 
Railroad Company in the Supreme Court of Wisconsin, as 
published in 9 Am. Law Reg., 156, in conflict with our opinion 
as now announced. 

In that case, Dixon, Judge, giving the opinion of the Court, 
held that a municipal corporation could not, under the consti- 
tution of that State, loan its funds to a railroad corporation, 
although he expressed the opinion that it might subscribe to the 
capital stock of the company, because it became to that extent 
owner of the improvement, and such ownership made it public 
property. 

It is not necessary that we should consider any such dis- 
tinction. But we may add that we have found no authority, 
and have been referred to none, inconsistent with the principles 
we have expressed. 

Upon the whole case, we hold that "the act relating to cities 
of the first class, having a population exceeding one hundred 
and fifty thousand inhabitants," passed May 4, 1869, and the 
act of March 25, 1870, supplementary thereto, both of which are 
recited in the petition, are constitutional and valid — in which 
opinion we are unanimous. 

Storer, J. It might be supposed in a case of eo much im- 
portance, that each of the Judges would announce an opinion; 
but Judge Taft had so exhausted the subject, and given the in- 
dividual views of his associates so fully, combining them with 
his own, that it is scarcely necessary they should do more than 
to subscribe to his opinion. 

There was one idea, however, it might be proper to refer 
to here, by the way of illustration, as it was suggested when 
the case was before the judges in the consulation room. Sup- 
pose it was necessary to build a bridge across the Ohio river at 
this point, could not the Legislature authorize the city of Cin- 
cinnati to build it, provided the §tate of Kentucky would permit 
the abutments on that side to be put up ? It did not appear to 
the Court there could be any doubt on that point. 

Hagans, P., J. The present case has been under advise- 
ment with the general term, since the month of October; the 
whole subject has been most carefully considered, in view of the 
magnitude and importance of the questions involved, as well as 
the discussion of them that has been had, not only before the 
Court but elsewhere. The result reached is entirely satisfactory 
to each member of the Court. 



APPENDIX C. 

Common Carrier Act. 

(74 Ohio Laws. 84.) 

AN ACT authorizing the organization of common carrier com- 
panies. 

Section 1. Be it enacted oy the General Asembly of the 
State of Ohio, That any number of persons, not less than five, may 
associate and become a body corporate with the powers in this 
act granted, upon complying with requirements thereof. 

Sec. 2. The persons so associating shall, under their hands 
and seals, make a certificate, which shall specify as follows : 

First : The name to be assumed by the corporation and 
by which it will be known. 

Second : The amount of capital stock necessary, and the 
amount of each share. 

Third : The name of the place and the county in which the 
principal office of the company will be kept. 

Fourth : That the purpose of associating is to become a 
common carrier company. 

Said certificate shall be acknowledged before a notary pub- 
lic or justice of the peace, and certified by the clerk of the 
Court of Common Pleas, and shall be forwarded to the Secretary 
of State, who shall record and carefully preserve the same in his 
office, and a copy thereof, duly certified by the Secretary of State 
under the great seal of the State of Ohio, shall be evidence of 
the existence of such corporation. 

Sec. 3. "When the foregoing provisions have been com- 
plied with, the persons named as corporators in said certificate, 
their associates, successors and assigns, shall be deemed a body 
corporate; and said corporation shall have power to make and 
use a common seal, and the same to alter and renew at pleasure ; 
to sue and be sued, plead and be impleaded, defend and be 
defended, contract and be contracted with, and acquire and con- 
vey at pleasure all such real and personal estate as may be 
necessary and convenient to carry into effect the objects of the 
incorporation. 

Sec. -i. Said corporation shall also have the following 
powers : 

(142) 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY l/,3 

First : To make all contracts that it shall be lawful for 
natural persons to make, for the carriage of persons and the 
storage, forwarding, carriage, and delivery of property, but sub- 
ject to the same liabilities. 

Second: To lease and to hold and operate any line of rail- 
way and its appendages, either before or after its completion, 
owned by a municipal corporation of this State, and any rail- 
way connected therewith lying without this State, and such por- 
tion of any railroad within this State as may be necessary for the 
convenient dispatch of the business of the corporations organized 
under this act. 

Third: To construct or complete and equip any railway 
and its appendages which it is authorized to lease. 

Fourth : To borrow money not exceeding its authorized 
capital stock, at a rate of interest not exceeding seven and three- 
tenths per cent, per annum, and execute bonds or promissory 
notes therefor, payable in gold or lawful money, in sums of not 
less than one hundred dollars, and, to secure the payment 
thereof, may mortgage or pledge its property then or thereafter 
acquired, and its income and franchises including the franchises 
of being a corporation, provided that no mortgage bonds shall be 
sold at less than par in lawful money without the consent of a 
majority in interest of the stockholders, given at a meeting of 
the stockholders, or in writing. 

Sec. 5. The business and property of such corporation 
shall be managed and conducted by a board of directors, con- 
sisting of not less than five stockholders, who shall be chosen, ex- 
cept at the first election, after such notice, and at such time and 
place within the county where the principal office of the com- 
pany is kept, and for such term as shall be provided for the by- 
laws. Immediately after their election, the trustees shall elect 
one of their number president of the corporation, and may ap- 
point such other officers and agents as they may deem necessary. 
They shall have power to make such rules and regulations and 
by-laws as may be necessary for the management of the affairs 
of the corporation. 

Sec 6. Subscriptions to the capital stock shall be paid in 
such installments, at such times and places, and to such per- 
sons as may be required by the board of directors. Each share 
shall be the personal property of the holder, and shall entitle him 
to one vote at all elections and meetings of the stockholders, to 
be given in person or by proxy. 

Sec. 7. The stockholders of every corporation organized 
under this act, shall be liable for the dues of the same over and 
above the stock by him or her owned, and any amount unpaid 
thereon, to a further sum equal in amount to such stock. 



1U FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

Sec. 8. The persons named in the certificate of incorpora- 
tion, or any committee of them, not less than three, shall be com- 
missioners to open books for subscriptions to the capital stock 
at such time and place as they shall deem proper, after giving 
ten days' notice by publication in some newspaper of general 
circulation in the county in which the company's principal 
office is to be kept, Full and equal opportunity shall be given 
to all persons desiring to subscribe for stock to do so, and in 
case more than the authorized capital shall be subscribed, a 
proportional allotment omitting fractions shall be made among 
the subscribers. 

Upon ten per cent, of the stock being subscribed, said com- 
missioners shall give notice by ten days' publication as herein- 
before provided, to the stockholders to meet at a time and place 
to be designated, and hold an election of directors, who shall con- 
tinue in office until the time fixed for the annual election and 
until their successors are chosen and qualified. 

Sec. 9. Any company heretofore or hereafter incorporated 
or organized under the laws of this State, may subscribe for or 
become the owner of stock in the corporations authorized by this 
act: Provided, that before any such subscriptions shall be made, 
the directors of the company subscribing shall be authorized to 
make the same by a vote of the majority in interest of the stock- 
holders, or obtain their consent thereto in writing. 

Sec. 10. "Whenever any company organized under this 
act shall, in the opinion of the Directors thereof, require an in- 
creased amount of capital stock, they shall, if authorized by the 
holders of a majority in interest of the stock, file with the 
Secretary of State a certificate setting forth the amount of such 
desired increase, and thereafter such company shall be entitled 
to have such increased capital as fixed by said certificate. 

Sec. 11. Any association or company of not less than five 
persons, formed for the purpose of being a common carrier com- 
pany, may be organized into a corporation pursuant to the pro- 
visions of this act, with the same powers, privileges and rights 
as if originally organized and incorporated under the same. 

Sec. 12. This act shall take effect and be in force from 
and after its passage. 

Passed April 12th, 1877. 



APPENDIX D. 

Memorandum of Agreement between the Trustees of the Cincin- 
nati Southern Railway and the Cincinnati Southern Rail- 
way Company, WITNESSETH: 

Whereas, The said Trustees have about completed that por- 
tion of the Cincinnati Southern Railway lying between Ludlow 
and Somerset, 160 miles long, with an incline plane at Ludlow 
reaching to the Ohio River, and a line of telegraph between 
the same places, and 

Whereas, Said Trustees have power, by virtue of the act 
under which they are appointed, to rent or lease the right to 
use and operate such portions of said railway as may be com- 
pleted upon such terms as they may deem best, and 

Whereas, Said Trustees deem it their trust duty and the 
interest of Cincinnati to provide for the travel and traffic likely 
to arise along the completed portion of said railway, and from its 
connections, it is agreed as follows : 

First : That the said Trustees, for the consideration here- 
inafter stated, hereby give and grant to the said company a 
determinable license, with the rights, following, viz. : 

1. To pass and repass and have full and free ingress, egress 
and regress, with its engines, cars, officers, agents and servants, 
to, over, upon and along the main and side tracks, turn-outs, 
switches, turn-tables, water and fuel stations, and all the other 
conveniences, and into and out of the grounds, depots, stations, 
stables, shops, and other appendages, of said portion of said rail- 
way. 

2. To use the Mne and telegraph as now constructed be- 
tween the aforesaid points, and the offices, batteries, instruments 
and other conveniences connected therewith, by its own officers, 
agents and servants, for commercial and railway business, but 
subject to the right of said Trustees, their officers and agents, 
to have their official messages sent over the same free of charge, 
which the said company agrees to do. 

3. To stretch and maintain additional wires on the posts 
erected along said line, between said points, and to establish 
new offices and facilities for the business passing over the same. 

(145) 
10 



U6 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

But all the foregoing rights shall be subject to the following 
rules and regulations: 

I. The said portion of said railway shall be operated, and 
the locomotives, cars and trains thereon run under the direction 
of a Superintendent of Transportation, to be appointed by said 
company, who. together with the Superintendent of said railway, 
appointed by said Trustees, shall from time to time establish 
such uniform rules and regulations for the passage of locomo- 
tives, cars and trains, and the use of grounds, depots and other 
appendages, as will tend to the most efficient working of said 
portion of said railway for all purposes, giving preference, how- 
ever, to travel and traffic over construction, supply and repair 
trains, except in cases of emergency: provided, that such rules 
and regulations shall at all times be subject to the approval of 
said company and said Trustees ; and if they can not agree as to 
the rules and regulations so to be established, the subject mat- 
ter of difference shall be subject to arbitration as hereinafter pro- 
vided. 

II. The railway business shall in all cases have preference 
over all other business on the wire now up. 

Second : Said Trustees to furnish to said company during 
the first three months of this license, fuel, water, and such 
railway supplies as they may have at cost to them, and at like 
cost to make such repairs of engines and rolling stock as the 
means now at their command will allow: but at any time after 
said period of three months, said Trustees shall have the option 
of requiring said company to furnish its own fuel, water and 
railway supplies, and to make its own repairs of engines and 
rolling stock, and. in case said Trustees shall exercise their said 
option, the fuel, railway supplies and the tools and materials in 
the repair shops shall be taken by said company at a valuation 
to be made by said Superintendent of Transportation and said 
Superintendent of Railway, and. if they can not agree, by an 
umpire chosen by them, and if said Trustees should, after said 
option is exercised, continue to have construction and repair 
trains, the said company shall furnish to said Trustees at cost, 
fuel, water and such railway supplies as said company may have. 
and shall at like cost to said company make such repairs of said 
Trustees' engines and rolling stock as the means at command of 
said company will allow. Said company shall also, 'after the 
exercise of said option, have the use and control by its own 
officers, agents and servants of all fuel and water stations, and 
the pumps, engines and fixtures appurtenant thereto, and shall 
keep the same in repair. 

Third: Said Trustees shall allow and hereby grant the 
said company the use of two of their engines. Xos. and forty 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 1J,7 

of their flat cars, to be hereafter designated, and said company 
accepts the same on the following* terms: 

That it will keep and return the same in as good order and 
repair as the same may be when delivered to it, natural wear 
and tear excepted ; and in case of the loss or destruction of any 
of them, it will replace the same, or pay the fair value thereof, 
to be ascertained by the arbitrators hereinafter provided. 

Fourth : Said Trustees to keep and maintain said portion 
of the railway in sufficient order and repair for the business 
likely to arise along the line of the same during the existence of 
this license, and to provide such temporary depots, platforms, 
engine and station-houses and repair shops as may be necessary 
for said business, as soon as it can be conveniently done. 

Fifth: The foregoing license to continue until sixty days 
after the making of a contract by said Trustees with said com- 
pany, or other parties, for the completion and leasing of the 
whole line of the said Cincinnati Southern Railway, when the 
same shall terminate ; and in case said Trustees should not make 
. such a contract, they shall have the right at any time to terminate 
said license upon serving written notice of their intention so 
to do at the principal office of said company six months before 
the day fixed in said notice for the termination of said license. 

Sixth : At the expiration of said license, or other termina- 
tion of the same, except by the default of said company, said 
Trustees shall provide for the reimbursement of the said com- 
pany 's outlay, at its election, as follows : 

T. That the persons or company taking said contract and 
lease, or otherwise succeeding said company in its operation of 
said railway, shall take at a fair valuation all the engines and 
other rolling stock and personal property of said company, and 
shall assume all such time contracts for the carriage of freight 
and passengers, or other contracts of a like nature, as may have 
been sanctioned by said Trustees. The said valuation shall be 
made by a majority of five valuers, to be chosen two by each of 
the aforesaid parties, and the fifth by said Trustees. 

II. Or that the said persons or company shall for said 
engines, rolling stock, and other personal property, return or 
pay to said company an amount which shall equal with the net 
earnings of said company, the amount of its cash capital actually 
paid in, together with interest thereon at the rate of ten per 
centum per annum from the date of payment in, and shall as- 
sume all such time contracts for the carriage of freights and 
passengers or other contracts of a like nature as shall have been 
sanctioned by said Trustees. 

Seventh : In case a dispute shall arise under the last article 
between said company and the persons or company taking a con- 



148 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

tract to complete and lease said railway, or otherwise succeeding 
said company in its operation of the same, said dispute shall 
be determined by a majority of said Trustees, and their de- 
termination shall be final between the said parties, who shall 
abide by and perform the same. 

Eighth: No other license for traffic or travel over the por- 
tion of said railway shall be granted to any other persons or com- 
pany, to take effect during the existence of the foregoing license, 
but the same shall be exclusive as to traffic and travel, except as 
to so much of said railway as lies between Lexington and 
Nicholasville, to run over which for a period of sixty days with 
passenger trains, and for ninety days for freight or mixed trains, 
dating from the 1st day of May in each case, a license, deter- 
minable on ten days' notice, has been granted to the Kentucky 
Central Railroad Company, and said Trustees agree to give said 
notice whenever requested by said Cincinnati Southern Railway 
Company. 

Ninth: The said company shall furnish and keep in good 
order and repair sufficient locomotives and other rolling stock 
to run daily (Sundays excepted) such trains as will do the busi- 
ness of said portion of said railway promptly, and shall run the 
same with its own agents ; and in case said company shall fail so 
to do, the said Trustees shall have the right to terminate this 
license by serving at the principal office of said company written 
notice of their intention to terminate the same for this cause, 
ten days before the day fixed in said notice, provided that in 
case the said company dispute their default, the matter of differ- 
ence shall be submitted to arbitrators, as hereinafter provided. 

Tenth: No locomotive or other rolling stock shall be run 
by said company on said portion of said railway that is not in 
good order and repair, and any such rolling stock not in good 
order or repair so run on the same, and not removed therefrom 
after reasonable notice, shall be liable to be treated as damage 
feasant. But nothing herein shall be construed into a duty upon 
the part of said Trustees to exercise their rights. 

Eleventh : A tariff for freight and passengers shall be 
agreed upon between said company and said Trustees, and may 
be changed from time to time by like agreement, and in case of 
difference the matter in dispute shall be referred to arbitration 
as hereinafter provided. 

Twelfth: Said company shall keep regular books of ac- 
count in the most approved form for railway accounts, and use 
all the most approved forms for the freight and passenger busi- 
ness upon said portion of said railway, and the business of said 
telegraph line done under this license, and shall render within 
the first ten days of each month, monthly statements to said 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY l',9 

« 

Trustees, showing its entire receipts and expenditures under this 
license; and the said Trustees, by themselves or agents, shall 
have free access to all books and freight and passage lists, and 
other writings appertaining to the business done under this 
license, and may, at their own cost, put their agents on any and 
all trains, or in any office, depot or place, to test the correctness 
of all accounts. 

Thirteenth : Said company shall, during the continuance 
of this license, do every act and thing that may be by law re- 
quired of or be obligatory upon it or said Trustees, in respect 
to the operation and use of said portion of said railway by said 
company, including the keeping and rendition of all accounts 
and reports that shall be by law required, either making and re- 
turning the same to the authorities of the State, or furnishing 
all the data in its possession to enable the said Trustees to make 
the same, and in all cases, as the law may require. 

Fourteenth: Said company shall keep and save said Trus- 
tees harmless from any and all damages arising out of their run- 
ning their locomotives and cars under this license, and caused 
by the negligence or default of said company's agents and 
servants. 

Fifteenth: And in consideration of the covenants ?.nd 
agreement of said company, said Trustees agree to allow said 
company to retain so much of the net earnings from the business 
done under this license as shall amount to the rate of ten per 
centum per annum on its paid-up cash capital from the date of 
payment, and ten per centum on the balance of said net earnings, 
the remainder to be paid over to said Trustees as and for rent, 
for the use of said engines and rolling stock of said Trustees and 
said portion of said railway and telegraph line. The first ac- 
count of said net earnings shall be made up to and inclusive of 
the 30th day of June, 1877, and thereafter quarterly during the 
existence of this license. A statement thereof shall be delivered 
to the Secretary and Auditor of said Trustees at their office in 
Cincinnati within ten days after the same is required to be 
made up, and at the same time the Trustees' share shall be paid 
over to them. If, at the expiration of this license, or other 
termination of the same, except by the default of said company, 
it should happen that the net earnings in any quarter are not 
sufficient to pay said company the rate of ten per centum per 
annum on its paid-up cash capital from the date the same is 
paid in, then the said Trustees shall repay said company out of 
their share of said net earnings the amount deficient, provided 
that no such repayment shall be made of any deficiency happen- 
ing after the 1st day of January, 1878, nor any existing at the 
termination of this license through the default of said company, 



150 FOUNDING OF CINCINNATI SOUTH ERN RAILWAY 

as provided in the ninth article, in which case the said account 
shall be made up to the date of such termination and be de- 
livered within ten days thereafter, when the share of said Trus- 
tees shall be paid over. 

Sixteenth: It is also agreed that all the questions of differ- 
ence arising between the parties hereto in relation to the true con- 
struction of this agreement or otherwise in reference to the 
rights of the parties under the same, except as to the right of 
said Trustees to determine disputes under the sixth article, as 
provided in the seventh article hereof, shall upon the written de- 
mand of either party, be submitted to the arbitration of three dis- 
interested arbitrators, two of whom shall be experienced and 
skilled in railroad management, to be selected as follows: one 
by each party and the third by the two so chosen; but if either 
party shall fail to appoint an arbitrator on its or their part 
within ten days after written notice of the selection of one by the 
other party, then the arbitrator selected by the party giving 
notice shall select the second, and the two thus chosen shall choose 
the third, and the award of said arbitrators, or a majority of 
them thus selected, shall be final and conclusive between the 
parties hereto. The said arbitrators shall meet at Cincinnati, 
and, on notice to the parties, proceed without being sworn, to 
hear and determine the controversy: and if it relates to the 
manner of using said portion of said railway, or the rules 
and regulations herein provided for, or the tariff for freight 
or passengers, said arbitrators shall have power to award and 
determine the manner of such use and the proper rules and regu- 
lations to be observed and the proper tariff to be fixed, and to 
direct either party to do all such acts as may be necessary or ex- 
pedient to carry their award into effect. And they shall also 
have power to award and determine that for each default or 
evasion of their rules and regulations, or their award as to the 
manner of using the said portion of the said railway, that the 
party in default shall pay to the other such sum or sums as and 
by way of liquidated damages as they or a majority of them shall 
appoint, and they shall likewise have power to determine the 
amount and the party to pay the costs of the arbitration. And 
it shall be a good and complete bar to any action at law, or suit 
in equity founded on any matter which by the provisions of this 
contract might have been submitted to such arbitration, that no 
demand for the same had been made ; or that the same had been 
submitted to arbitration under this agreement, and that said 
arbitration was still pending: or that an award had been made 
and performed. 

Seventeenth: And each of said parties covenants with the 
other that it will keep and perform all the stipulations of this 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 151 

agreement to be by it or them kept and performed, and that 
they will not evade or violate the same, and particularly that 
said company will deliver its engines and other rolling stock 
and property to the persons or company taking the contract to 
complete and lease the whole line of said railway, or otherwise 
succeeding said company as hereinbefore provided, upon the 
determination and award of the Trustees as provided in the 
seventh article hereof, and that in case of a refusal so to do, and 
in case of a termination of this license through the fault of said 
company as herein provided in the ninth article, will remove its 
said engines and other rolling stock and property from said 
portion of said railway, and will not attempt to interfere with 
or interrupt the use of the same by other licensees or lessees of 
said Trustees. 

Eighteenth: The said Trustees hereby agree to extend the 
foregoing license to such other portions of the said railway and 
telegraph as they may complete out of their own funds, upon con- 
dition that all the stipulations and covenants of this agreement 
shall apply with equal force and effect to said extension. 

In Witness Whereof, the said Cincinnati Southern Kail- 
way Company has caused its corporate seal and the signature 
of its President to be hereunto affixed ; and the said Trustees have 
caused Miles Greenwood, President of the Board, to sign this 
agreement in triplicate on their behalf as such Board, and not 
individually, on the day of , A. D. 1877. 

Note to appendix D. 

Under the fifth clause of the foregoing license the Trustees 
terminated the same and granted a new license to The Cincinnati 
Railroad Company, a new company organized under the Com- 
mon Carrier Act. The provisions of the new license were sub- 
stantially the same as the foregoing, the principal exception be- 
ing that but seven per cent, of the net earnings were allowed to 
be retained by the company. This license terminated upon the 
lease of the road to The Cincinnati, New Orleans and Texas 
Pacific Railway Company, October 11, 1881, a company also 
organized under the Common Carrier Act. 1 

iSee Appendix C. 



APPENDIX E. 

Form of Lease prepared by E. A. Ferguson and adopted 
by the Trustees, December 18, 1880. The rental clause which 
was to form Article II was laid over for future consideration. 
This form of lease was drawn after a careful study of all the 
principal forms of lease obtainable, such as the Pittsburgh & 
Fort Wayne Company's lease to the Pennsylvania Railroad 
Company and the lease of the Little Miami Railroad Company. 
All the principal provisions of the final form of lease to the Cin- 
cinnati, New Orleans and Texas Pacific Railway Company, 
which was the work of the joint action of the Board of Trustees 
of the Railway and the Board of Trustees of the Sinking Fund 
of Cincinnati, w T ere taken from this form. (See Minute Book 7, 
pages 453-467.) 

FORM OF LEASE. 

This lease made between the Trustees of the Cincinnati 
Southern Railway, party of the first part, and 

party of the second part, 

WITNESSETH : 

Recital of powers Whereas, The said Trustees were appointed under and by 

of Trustees virtue of an act of the General Assembly of the State of Ohio, 

passed on the fourth day of May, in the year eighteen hundred 
and sixty-nine, entitled "An act relating to cities of the first 
class having a population exceeding one hundred and fifty 
thousand inhabitants," with authority given in said act and the 
acts supplementary thereto to borrow money and to issue bonds 
therefor in the name and under the corporate seal of the city 
of Cincinnati, and with power to expend said money in procur- 
ing the right to construct and in constructing a single or double 
track railway with all the usual appendages, including a line 
of telegraph between the city of Cincinnati and the city of 

152 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 153 

Chattanooga, in the State of Tennessee, to be called and known 
as "The Cincinnati Southern Railway," and with power and 
capacity for the purpose aforesaid to make contracts, to acquire, 
hold and possess all the necessary real and personal property 
and franchises, either in the said State of Ohio or into any other 
State into which said line of railway might extend, and with 
other powers in said acts expressed, among which is the power 
to lease the whole line of said railway after its final completion, 
and 

Whereas, The said Trustees under and by virtue of the 
powers given them in the aforesaid acts of the General Assembly 
of the State of Ohio, and under and by virtue of certain acts 
passed by the General Assembly of the Commonwealth of Ken- 
tucky, and the General Assembly of the State of Tennessee, con- 
senting to the said Trustees exercising the powers given them by 
the said Ohio acts within their respective jurisdictions, have con- 
structed and completed the said line of railway extending from 
the city of Cincinnati to the city of Chattanooga; therefore 

It is hereby mutually agreed between the said Trustees and 
the said second party as follows : 

Article I. The said Trustees, for and in consideration of the 
rents, covenants and agreements hereinafter mentioned, reserved Grant of term, 
and contained, on the part and behalf of the party of the second 
part to be paid, kept and performed, have granted and leased 
for the term hereinafter stated and fixed, the said line of rail- 
way known as the Cincinnati Southern Railway, with all its ap- 
pendages, and the works and conveniences of the said railway, 
such as offices, stations, shops, sheds, depots, car houses and other 
buildings, bridges, viaducts, tunnels, arches, piers, abutments, 
embankments, approaches, ways, aqueducts, culverts, sewers, 
drains, wharves, yards, fences, telegraph posts and wires, tracks, 
turnouts and turntables, and the rights of way and lands be- 
longing to or hereafter acquired by said Trustees, whereon the 
said and other like works and conveniences used or to be used 
in constructing, maintaining, or operating said railway are or 
may be placed, together with all such rights and franchises held 
by the said Trustees as may be necessary to enable the said party 
of the second part to carry out and perform the provisions 
hereof, and to operate and conduct the business of said premises 
hereby leased. 

To have and to hold the said line of railway and its ap- 
pendages unto the said party of the second part, successors 
and assigns, from the delivery of possession under this lease as 
hereinafter provided, for and during and until the first day of 
January, in the year one thousand, nine hundred and six, the 
said party of the second part, successors and assigns, yield- 



154 FOUXDIXG OF CIXCIXXATI SOUTH ERX RAILWAY 

ing and paying therefor unto the said party of the first part, 
their successors and assigns, every year during the term hereby 
granted the rent hereinafter specified, and keeping and perform- 
ing all and singular the covenants and agreements hereinafter 
set forth to be by the said party of the second part kept and per- 
formed : it being understood and provided, however, that these 
presents are subject to the rights granted to the Cincinnati Rail- 
road Company by a determinable license hereinafter referred to. 

Article II. The annual rent hereby reserved shall be and 
consist of the sums in this article specified: and the same shall 
be paid in lawful money of the United States of America by 
the party of the second part to the party of the first part at 
the times and place and in the manner following: 

Article III. The said party of the second part hereby 
covenants and agrees with the said party of the first part as 
follows : 

Section 1. That by or before the first day of July in the 

year one thousand, eight hundred and ninety-eight will 

make the entire railway with its structures, appendages, outfits 
and equipment, equal to the best of the first class single track 
railways in the United States at that time, but the foregoing 
shall not be held to include the contract work now let by the 
Trustees. 

Sec. 2. That before possession is given under this lease, 
the said second party shall pay to the said first party, or secure 
to be paid to the satisfaction of the said first party, the value of 
all locomotives, rolling-stock, machinery, tools, implements, 
furniture, fuel, material, cross-ties, rails, telegraph poles, and 
other railway supplies, which shall then belong to said party of 
the first part, who shall thereupon, assign, transfer and deliver 
the same to the said party of the second part for use upon the 
said leased railway. The value of said property shall be as- 
certained by a majority of five valuers, to be chosen as fol- 
lows: two by each of the aforesaid parties, and the fifth by the 
four so chosen. 

Sec. 3. And whereas, the said Trustees by a certain 
memorandum of agreement, made between them and the Cincin- 
nati Railroad Company, dated on the ninteenth day of May in 
the year one thousand, eight hundred and seventy-nine, to which 
reference is hereby made for the terms and conditions of the 
same. granted to the said railroad company a determinable license, 
with the rights therein stated, upon which is that said Trustees 
upon the expiration of said license or other termination of the 
same, should provide for the reimbursement of the said com- 
pany's outlay, and the assumption of its contracts as in the 
tenth article of said agreement is provided. Xow the said party 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



155 



of the second part, hereby undertakes and agrees, to carry out, 
fulfill and observe the obligations of the said Trustees, as in said 
tenth article provided, and to submit to arbitration any dispute 
arising out of said article as provided by the said article of said 
agreement. 

Sec. 4. And whereas, the said Trustees, have sanctioned a 
certain agreement, dated on the sixth day of September, A. D. 
1879, between the AVestern and Atlantic Railroad Company, and 
the said Cincinnati Railroad Company, for the use of the track 
of the Western and Atlantic Railroad between Boyce's Station, 
and Chattanooga, for two years from December 1, A. D. 1879, 
at a rental payment to said first named company of two hundred 
and fifty dollars per month, and have likewise entered into the 
following agreements. 

First: An agreement entered April 11, A. D. 1880, be- 
tween the Marietta & Cincinnati Railroad (as re-organized), the 
said Cincinnati Railroad Company, the Trustees of the Cincin- 
nati Southern Railway, and the Cincinnati and Baltimore Rail- 
road Company, providing for connection tracks and freight depot 
accommodations in Cincinnati. 

Second: An agreement dated April 2, A. D. 1880, between 
The Cincinnati, Indianapolis, St. Louis and Chicago Railroad 
Company, the said Cincinnati Railroad Company and the Trus- 
tees of the Cincinnati Southern Railway, providing for a con- 
nection track accommodation in Cincinnati. 

Third: An agreement dated July 31, A. D. 1880, between 
the same parties named in the second clause thereof, providing 
for a connection track with the grain elevator of the said Cin- 
cinnati, Indianapolis, St. Louis and Chicago Railroad Company 
in Cincinnati. 

Fourth : An agreement dated July 31, A. D. 1880, between 
the same parties named in the second clause hereof, providing 
for a car track transfer on the grounds of the said Cincinnati, 
Indianapolis, St. Louis and Chicago Railroad Company in Cin- 
cinnati, to all of which agreements reference is hereby made for 
the terms and conditions of the same, 

Now the said party of the second part hereby undertakes and 
agrees to carry out, fulfill and observe all the obligations of the 
said Trustees and the said Cincinnati Railroad Company, as in 
said agreements provided. 

Article IV. The said second party further covenants and 
agrees with said first party, as follows : 

Section 1. That will keep the said line of railway 

supplied with rolling-stock and equipment so that the business 
of the same shall be preserved, encouraged and developed, and 
that the same shall at all times be done with safety and ex- 



To supply rolling 
stock sufficient to 
do business. 



J 56 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



To $ we Trustees 
harmless, etc. 



To make repairs 
and deliver up 
road in good con- 
dition. 



To pay all taxes. 



pedition, and the public be accommodated in respect thereto with 
all practicable conveniences and facilities, and that all future 
growth of such business as the same may arise, or be reasonably 
anticipated, shall be fully provided for and secured; and that 
all reasonable efforts shall be used to maintain, develop and in- 
crease the business of said line of railway. 

Sec. 2. That will pay and save the first party 

harmless from the payment of any costs, expenses, claims, liabili- 
ties, damages and demands whatsoever, arising out of the pos- 
session, management and operation of said line of railway, and 
its appendages, or any part thereof, the said second party tak- 
ing upon the same duties, liabilities and obligations in 
respect thereto as if had become the owner therof, and 
doing every act and thing that may be by law required of, or 
be obligatory upon or said Trustees, their successors 
and assigns. 

Sec. 3. That will, whenever needed, do all re- 

pairs, replacements and renewals on the said line of railway and 
its appendages, and maintain, preserve and keep the same and 
every part thereof in thorough repair, working order and condi- 
tion, and at the end or other sooner termination of this lease, will 
redeliver and surrender up the same in the condition in which 
they are required to be put and kept by this lease ; but this 
covenant and the liability of said second party thereunder shall 
be subject to the following exceptions. In case it shall happen 
that any of the spans or the bridges, over the Ohio, Kentucky, 
Cumberland, New or Tennessee rivers or the viaduct across the 
South Fork of Green river, or any of the viaducts exceeding one 
hundred feet in heighth, shall be carried away or destroyed by 
a tornado, the said second party shall not be required to renew 
or replace the same, but such renewal or replacement shall be 
done by the said Trustees ; and in case the said Trustees shall fail 
to so renew or replace the same within a reasonable time, the 
said second party shall have the right so to do, and charge the 
cost thereof to the said Trustees, which sum, with lawful interest 
thereon from the date of delivery to said Trustees of an account 
of said cost, said second party shall and may deduct from the 
rent herein reserved until the same be fully repaid. 

Sec. 4. That will, as often as the same shall be- 

come due, pay and discharge any and all taxes, assessments, 
duties, imposts and charges whatsoever which shall or may 
be levied, assessed or imposed during the term hereby granted 
by any governmental or lawful authority whatsoever upon said 
leased railway and its appendages, or any part thereof, or upon 
any business or earnings, or income of the same, or by reason of 
the ownership thereof, it being the true intent and meaning of 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



157 



this section that all governmental charges upon the aforesaid 
property or income therefrom which may be imposed by or 
under any governmental authority capable of enforcing such 
charges against or through said property, or the corporation 
owning or the party leasing the same, shall be assumed and 
satisfied by the party of the second part, however the forms 
thereof may change during the term hereby granted. 

Sec. 5. That will not change -the gauge of the 

said railway, or any part thereof, nor add or lay any other gauge 
thereon without the written consent or license of the said first 
party, nor will assign this lease or underlet the said 

line of railway, or any part thereof, without the like written 
consent or license ; and a license or consent as aforesaid to do 
either of the acts aforesaid shall not wholly release the said 
second party from this covenant, but every such license or con- 
sent shall be a waiver or release so far only as respects any act 
done according to the terms expressed in such license or consent. 

Sec. 6. That will not enter into any contract with 

any fast freight or other company, the effect of which will be 
to diminish the gross receipts or mileage properly due and pro- 
portionally earned for passage over said line of railway ; and all 
contracts for the passage over said line or any part thereof 
of the engines or cars of any other person or company shall be 
so made as to inure to the mutual benefit of both parties hereto. 

Sec. 7. That will not discriminate against the 

citizens of Cincinnati in carrying freight or passengers on said 
line of railway, nor against freight or passengers from other 
railroads terminating in said city, but will charge and receive 
only the same and no more for the same services in transporting 
to and from said city freight and passengers going to or coming 
from one of said roads that charge or receive from those 

going to or coming from any other of said roads. 

Sec. 8. That will keep and perform all the stipula- 

tions and covenants of this lease, to be by kept and per- 

formed, and that will not evade or violate the same, and particu- 
larly that will well and truly pay, or cause to be paid, 
the rent herein reserved at the times and in the manner herein 
provided. That will abide by and perform the awards 
of the arbitrators herein provided for, that upon the expiration 
of this lease, will deliver engines, rolling-stock, railway sup- 
plies and other personal property to the persons or cbmpany suc- 
ceeding in operating said railway as hereinafter provided 
in Article 10, and that in case of a refusal so to do, and in case 
of a termination of this lease through default as herein 
provided will deliver to said Trustees, said engines, 
rolling-stock, railway supplies and other personal property used 



Lessees not to 
change gauge nor 
to assign or under- 
let without license 



Contracts with 
fast freight and 
other companies 
to inure to mutual 
benefit of both 
parties. 

Lessees not to dis- 
criminate against 
Cincinnati and 
roads terminating 
therein. 



To keep covenants 
and pay rent. 



158 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



Recital of duties 
of Trustees 



Lessees to pay an- 
nual sums to keep 
up organization of 
Trustees. 



To keep an office 
in Cincinnati and 
provide rooms for 
Trustees. 



Provide Trustees 
with passes and 
inspection car. 



Forfeiture clause 
for non-payment 
of rent or breach 
of covenants. 



in operating said railway, to be held and disposed of to other 
licensees or lessees of said railway and that will not at- 

tempt to interfere with or interrupt the use of the same by such 
licensee or lessees, or by said Trustees. 

Article V. Inasmuch as the said Trustees will, under this 
lease, have the settlement of the rentals herein reserved, 
the enforcement, if necessary, of any breach of this agree- 
ment by the said second party, and the exercise of the powers 
vested in said Trustees to acquire additional land and rights 
for said railway, and its appendages, the said second party 
agrees and covenants with said first party, as follows : 

Section 1. That will allow and pay without 

deduction from the rent herein reserved, as part of the expenses 
necessary in conducting the trust devolving on said Trustees, and 
for the compensation of such officers and agents as they may ap- 
point, such sums as shall from time to time be fixed and allowed 
by the Court appointing said Trustees, provided that the amount 
so to be paid shall not exceed twelve thousand dollars ($12,000) 
per annum, payable in four equal quarter-yearly installments, 
on the first days of January, April, July and October in each 
and every year. 

Sec. 2. That will during the continuance of this 

lease keep an office in the city of Cincinnati, which shall be the 
principal office of said second party, and be open at all reason- 
able hours and times for the transaction of the business of said 
leased railway, and shall reserve and furnish in said office, free 
of charge, two suitable and convenient rooms, with a proper and 
safe fire-proof vault for the use of the said Trustees and their 
officers, and that will likewise furnish, free of charge, 

suitable rooms for offices for such agents as by the laws of 
Kentucky and Tennessee said Trustees may be required to keep. 

Sec. 3. That will issue annual free passes on the 

line of railway hereby leased to the said Trustees and their 
officers and agents, and provide, furnish and transport along the 
same, free of charge, four times a year upon the demand and 
for the use of said Trustees, a suitable and convenient car, for 
the inspection of said leased line of railway, and its appendages. 

Article VI. In case the said party of the second part shall 
at any time or times hereafter, during the term herein granted, 
fail or omit to pay the rent herein reserved or provided to be 
paid by the said party of the second part, or any part of such 
rent, when the same shall become payable, as herein specified, or 
in case the said party of the second part shall fail or omit to 
keep and perform the covenants and agreements herein con- 
tained, or any of them, and shall continue in default in respect 
to the performance of such covenant or agreement for the period 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



150 



of ninety days, then, and in either and in every such case, it 
shall be lawful for the said party of the first part, at their 
own option, and without having made any legal or formal de- 
mand for such rent, to enter into and upon the said railway and 
premises hereinbefore leased, and any and every part thereof 
and remove all persons therefrom ; and from thenceforth the said 
leased railway and premises with the appurtenances thereof, and 
all additions and improvements which shall or may have been 
made to the same, to have, hold, possess and enjoy; and upon 
such entry for non-payment of rent or breach, or non- 
performance of any covenant or agreement herein contained, 
to be by the said party of the second part observed or performed, 
all the estate, right, title, interest, property, possession, claim 
and demand whatsoever of the said party of the second part, in 
or to the said leased railway and premises, or either or any part 
of either thereof, shall wholly and absolutely cease, determine, 
and become void, anything herein contained to the contrary in 
anywise notwithstanding; but in case of re-entry, as aforesaid, 
the rent reserved herein, and the several installments thereof, 
shall be apportioned, from the time of the last preceding pay- 
ments of such installments up to the time of such re-entry, and 
such portion thereof as Avould have been payable in respect to 
the intervening time, if the whole period in respect to which such 
installments were payable had elapsed, shall be deemed and 
taken to be due and payable, and the same shall be paid by the 
said party of the second part ; and it is further declared and 
agreed that such re-entry shall not waive or prejudice any claim 
or right of the party of the first part, to or for damages against 
the party of the second part on account of such non-payment 
of rent, or non-performance or breach of the terms of this lea^e, 
and all such claims and rights are hereby expressly preserved 
to the said part of the first part. 

And it is further expressly agreed, that a new power of re- 
entry shall arise in each and every forfeiture, breach or default 
as herein provided, notwithstanding the waiver of any prior 
right of re-entry or forfeiture respectively, and in like manner 
as if such right of re-entry or forfeiture had been the first right 
of re-entry or forfeiture under the foregoing provisions for re- 
entry; provided, that before said right of re-entry shall be ex- 
ercised, the same shall be ascertained and determined by arbitra- 
tors as hereinafter provided, unless such determination shall be 
prevented by the act of the said second party. 

And to facilitate and secure the enforcement of this article 
and condition, the said party of the second part does hereby ir- 
revocably appoint the Honorable Alphonso Taft, or any other 
attorney or counselor at law who may have been admitted to 



Warrant of attor- 
ncy in case of for- 
feiture. 



160 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



practice in the Supreme Court of the United States, and at that 
time be authorized to act by the party of the first part, with 
authority, in the name and on behalf of the said party of the 
second part, to appear in any suit or suits or actions, brought by 
the party of the first part against the said party of the second 
part, to recover possession of the said leased railway and prem- 
ises or the appurtenances thereof, or any part of the same, or 
to recover any installment of rent or any part thereof then over- 
due, in any Court or Courts having jurisdiction, to waive the is- 
suing or service of process therein, to confess judgment in the 
same, and to waive all error and right of appeal. 
Provision for ter- Article VII. And whereas, it will be necessary in the 

mina! facilities at proper management and operation of said line of railway, to 
Cincinnati and provide lands in the city of Cincinnati for work-shops, depots 
Chattanooga. and other terminal facilities and rights of way thereto, and 

Whereas, There is vested in said Trustees by the laws of 
the said States of Ohio, Kentucky and Tennessee, a continuing 
power to acquire or to enter upon, take and appropriate such 
lands or rights of way as may be necessary for the purposes afore- 
said, or for the purpose of changing the location or grade, or 
substituting other works or conveniences for those originally 
designed or constructed, or to provide additional side tracks or 
other appendages for the proper management and operation of 
the said railway, it is therefore further mutually agreed between 
the parties hereto as follows : 

Section 1. That whenever it shall be found necessary, to 
change the location or grade, or substitute other works or con- 
veniences for those originally designed or constructed, or to 
provide additional sidetracks or other appendages, the said 
Trustees shall and will, upon the request of said second party, at 
the proper cost and expense of the said second party, and with- 
out any deduction from the rents and other payments herein 
reserved and to be paid by said second party, acquire or enter 
upon, take and appropriate such lands and rights as may be 
necessary for the purpose aforesaid; provided, however, that 
no change of location shall involve a departure from the gen- 
eral route originally selected by said Trustees. 

Sec. 2. That said Trustees shall and will out of their trust 
At the expense of funds provide lands in the city of Cincinnati for workshops, 
trust fund. depots, and other terminal facilities and rights of way thereto ; 

provided that said Trustees shall, as between the parties here- 
to, be the sole judges of the location and extent of such lands 
and rights and the amount to be expended therefor. 

Sec. 3. Nothing in this instrument shall be so construed as 
to prevent the said first party from selling and conveying any 



At the expense 
of lessees. 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 



161 



superfluous lands or land which may become unnecessary for 
the maintenance, use and operation of said line of railway. 

Article VIII. And for the better assuring, leasing and 
confirming the estate, title, and interest of the party of the 
second part in the property hereby leased and assigned, and in- 
tended to be passed by this instrument, the said party of the 
first part hereby agrees with the party of the second part, that 
at any time hereafter, and as often as may be required by the 
party of the second part, the said party of the first part will do 
such acts and make such further assurances in the law as the 
party of the second part shall by counsel learned in the law be 
reasonably advised, are necessary for, or tending to, the better 
carrying out of the objects of the parties hereto. 

Article IX. It is also mutually agreed that all questions 
of difference arising between the parties hereto in relation to 
the construction of this agreement, or as to whether there has been 
a forfeiture or right of re-entry under article six of the same, 
or otherwise in reference to the rights of the parties under this 
lease, shall, upon the written demand of either party, 
stating in such demand, the question or questions claimed 
to be in dispute, be submitted to the arbitration of five dis- 
interested arbitrators, who are neither citizens nor taxpayers 
of the City of Cincinnati, to be selected as follows : 

Two by each party, and the fifth by the four so chosen, but 
if either party shall fail to appoint arbitrators on or 

their part within ten days after written notice of the selection 
of two by the other party, then the arbitrators selected by the 
party giving notice, shall select the other two, and the four thus 
chosen, shall choose the fifth, and the award of said arbitrators, 
or a majority of them thus selected, shall be final and con- 
clusive between the parties hereto, their successors and assigns. 
The said arbitrators shall meet at Cincinnati, and on notice to 
the parties, proceed, after being sworn, to hear and determine 
the controversy, and if it relates to any matter other than a 
forfeiture or right of re-entry, they shall have power to direct 
either party, to do all such acts as may be necessary or expedient 
to carry their award into effect, and if it relates to a forfeiture, 
or right of re-entry, as provided for in Article 6, and they shall 
adjudge and award that there has been a forfeiture or right of 
re-entry, they, or the majority concurring in such award, shall 
have power, and the said party of the second part, does hereby 
irrevocably appoint them or the majority of them concurring 
aforesaid, as attorneys in fact, with authority in the 

name and in behalf of the said party of the second part, to exe- 
cute and deliver to the party of the first part a surrender of this 
lease, and all rights under the same, and with power and au- 

11 



Superfluous lands 
may be sold. 

Covenant for fur- 
ther assurance. 



Arbitration clause 



162 FOUNDING OF CINCINNATI SOUTHERN RAILWAY 

thority to take possession of and deliver to said Trustees the 
engines, rolling-stock, railway supplies and personal property 
of said second party used in operating said railway to be held 
and used for the purpose of operating said railway until said 
Trustees can dispose of the same, after a valuation to be made 
by a majority of five valuers, to be selected and appointed by 
said arbitrators, or the majority of them concurring as aforesaid, 
to such persons or company as they may lease or license the use 
of the railway to; provided, that if said Trustees shall not dis- 
pose of said engines, rolling-stock, railway supplies and per- 
sonal property within days after they shall have taken 
possession. of the same, then and in that case said Trustees shall 
pay upon said valuation from the date of taking possession, in- 
terest at the rate of per centum, per annum, payable 
monthly until the same are disposed of as aforesaid, when said 
Trustees shall pay to the said second party, the amount realized 
by them, together with any accrued interest thereon, and the 
difference, if any there be, between the amount so realized, and 
said valuation. And said arbitrators shall also have power to de- 
termine and award the amount, and the party to pay the cost of 
arbitration. 

Article X. Upon the determination of this lease, except 
by the default of the said second party, said Trustees shall pro- 
vide for the reimbursement of said second party's outlay for 
engines, rolling-stock, railway supplies, and other personal prop- 
erty then on hand, and used in operating said railway as follows: 

The persons of company succeeding said second party in 
operating said railway shall take, and said second party hereby 
agrees to transfer and deliver to such persons or company, all 
the engines, rolling-stock, railway supplies, and other personal 
property at a fair valuation to be made by a majority of five 
valuers, tw-o of whom shall be chosen by said second party, and 
two by said persons or company, and the fifth by the four so 
chosen ; but if either party shall fail to appoint valuers on 
or their part within ten days after written notice of the selection 
of two by the other party, then the valuers selected by the party 
giving notice, shall select the other two, and the four thus chosen, 
shall choose the fifth. The first four valuers so chosen, shall 
meet at Cincinnati, within ten days after their selections to 
choose the fifth one, and in case they shall not within forty-eight 
hours after they assemble, select the fifth valuer, then the Trus- 
tees shall select him. The amount of said valuation shall be 
paid upon the transfer and delivery of the aforesaid property un- 
less the parties shall otherwise agree. 

Article XI. It is hereby expressly declared and agreed by 
and between the parties hereto, that this lease, and all the articles, 



FOUNDING OF CINCINNATI SOUTHERN RAILWAY 163 

covenants, agreements, terms and conditions thereof, shall be Agreement to bind 
binding on the parties hereto respectively, and their respective . 

j • j ±1. xi *• £ xi successors and 

successors and assigns, and that upon the cessation of the powers . 
of the said Trustees, the covenants and agreements with them 
shall pass to and be kept and performed with the City of Cin- 
cinnati, her successors and assigns, the same as if said city was 
expressly named therein. 

In Witness Whereof, etc. 



LIBRARY OF CONGRESS 

029 514 458 








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